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A decision support system for the procurement of military equipment

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  • Evan E. Anderson
  • Yu‐Min Chen

Abstract

The use of life‐cycle costs in procurement is limited by the accuracy of cost estimates and assessments of availability risks under the conditions generating costs. Critical to these problems are the needs and responses of equipment to maintenance and repair. Using transition probabilities to define the relationships between serviceability and maintenance and repairs, this article develops a comprehensive decision support system for military procurement. It uses a dynamic programming model to determine the least‐cost set of maintenance and repair decisions, where adjustments are included for warranty conditions, time value of money, the opportunity costs of equipment failure, and the end‐of‐cycle salvage values or disposal costs. The system allows users to define working and failed states, create their own rules or indicators of availability from estimates of state probabilities and establish thresholds of risk acceptability.

Suggested Citation

  • Evan E. Anderson & Yu‐Min Chen, 1988. "A decision support system for the procurement of military equipment," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(4), pages 619-632, August.
    • Handle: RePEc:wly:navres:v:35:y:1988:i:4:p:619-632
    DOI: 10.1002/1520-6750(198808)35:43.0.CO;2-L
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    References listed on IDEAS

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    1. Wallace R. Blischke & Ernest M. Scheuer, 1975. "Calculation of the cost of warranty policies as a function of estimated life distributions," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 22(4), pages 681-696, December.
    2. Courville, Leon & Hausman, Warren H, 1979. "Warranty Scope and Reliability under Imperfect Information and Alternative Market Structures," The Journal of Business, University of Chicago Press, vol. 52(3), pages 361-378, July.
    3. Sherif, Yosef S & Kolarik, William J, 1981. "Life cycle costing: Concept and practice," Omega, Elsevier, vol. 9(3), pages 287-296.
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    Cited by:

    1. Rempel, M. & Cai, J., 2021. "A review of approximate dynamic programming applications within military operations research," Operations Research Perspectives, Elsevier, vol. 8(C).

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