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Transforming the Acquisition Enterprise: A Framework for Analysis and a Case Study of Ship Acquisition

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  • Michael J. Pennock
  • William B. Rouse
  • Diane L. Kollar

Abstract

The acquisition of public sector complex systems is time‐consuming, very expensive, and rife with uncertainties. The enterprise associated with acquisition is an excellent candidate for transformation— fundamental change to achieve substantially higher levels of value. This paper argues that choosing among alternative transformation initiatives should be based on an enterprise‐wide perspective as well as systematic economic valuation of the alternative investments. An options‐based methodology for assessing the economic value of alternative initiatives is presented and illustrated in the context of military ship building. © 2007 Wiley Periodicals, Inc. Syst Eng 10: 99– 117, 2007

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  • Michael J. Pennock & William B. Rouse & Diane L. Kollar, 2007. "Transforming the Acquisition Enterprise: A Framework for Analysis and a Case Study of Ship Acquisition," Systems Engineering, John Wiley & Sons, vol. 10(2), pages 99-117, June.
    • Handle: RePEc:wly:syseng:v:10:y:2007:i:2:p:99-117
    DOI: 10.1002/sys.20070
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    1. Richard Bellman, 1954. "On some applications of the theory of dynamic programming to logistics," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 1(2), pages 141-153, June.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Richard Bellman, 1954. "Some Applications of the Theory of Dynamic Programming---A Review," Operations Research, INFORMS, vol. 2(3), pages 275-288, August.
    4. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    5. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September.
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    1. Sungchul Kim & Ronald Giachetti & Sangsung Park, 2018. "Real Options Analysis for Acquisition of New Technology: A Case Study of Korea K2 Tank’s Powerpack," Sustainability, MDPI, vol. 10(11), pages 1-18, October.

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