Advertisement

Journal of Intelligent Manufacturing

, Volume 23, Issue 6, pp 2407–2425 | Cite as

A prediction system for assessing customer affordability of whole life cycle cost in defence industry

  • Oyetola Bankole
  • Rajkumar Roy
  • Essam Shehab
  • Kalyan Cheruvu
Article

Abstract

The manufacturing, delivery and support of service contracts in defence aerospace industry require a high financial investment. It is essential that the customer has the financial ability to procure and support the contract from the conceptual and manufacturing phase to the end of the project given the budget constraints. The aim of this paper is to identify the factors that affect customer affordability of defence contracts and develop a customer affordability assessment framework which is implemented as a software prototype system. Two major quantitative factors and twelve qualitative factors were identified, out which seven factors (identified as the major factors) were included within the customer affordability system. Following the identification of factors and development of measures for each, suggested actions to improve customer affordability were also proposed. The research methodology combined both case study and literature review approach with industrial collaboration in the customer affordability system development. The customer affordability system was validated through collaboration with industrial partners and a case study from defence sector and the results showed that the customer affordability system was capable of providing a good assessment of customer affordability.

Keywords

Lifecycle costing Customer affordability assessment Defence contracts Customer affordability system Defence sector 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acquisition Operating Framework (2008). Technology readiness levels (TRLs). Ministry of Defence. http://www.aof.mod.uk/aofcontent/tactical/techman/content/trl_applying.htm. Accessed 19 January 2010.
  2. Asteris M. (1994) UK defence spending—trends and implications. Journal Royal United Services Institute for Defense Studies 139(5): 38–71Google Scholar
  3. Asiedu Y., Gu P. (1998) Product life cycle cost analysis: State of the art review. International Journal of Production Research 36(4): 883CrossRefGoogle Scholar
  4. Atkinson A. et al (2001) Management Accounting. Prentice Hall, Englewood Cliffs, NJGoogle Scholar
  5. Bankole, O. O., Roy R., Shehab, E., & Cheruvu, K. (2009a). An affordability prediction system to assess information availability in defence projects. In Proceedings of DET, 2009, 6th international conference on digital enterprise technology, Hong Kong, 14–16 December 2009.Google Scholar
  6. Bankole, O. O., Roy, R., Shehab E., & Wardle, P. (2009b). Affordability assessment of industrial product service system in the aerospace defence industry. In CIRP IPS2 conference 2009, on industrial product service systems. UK: Cranfield University.Google Scholar
  7. Bankole, O. O., Roy, R., Shehab, E., & Cheruvu, K. (2010). Product-service system affordability in defence and aerospace industries: State-of-the-art and current industrial practice. Forthcoming in International Journal of Computer Integrated Manufacturing.Google Scholar
  8. Bever, B., & Collofello, J. (2002). An investigation of techniques for addressing software affordability. In Aerospace conference proceedings, 2002, IEEE, 5,(pp. 5-2577–5-2585).Google Scholar
  9. Chang P.-C, Chen L.-Y., Fan C.-Y. (2008) A case-based evolutionary model for defect classification of printed circuit board images. Journal of Intelligent Manufacturing 19: 203–214CrossRefGoogle Scholar
  10. Chiu C., Chang P., Chiu N. (2003) A case-based expert support system for due-date assignment in a wafer fabrication factory. Journal of Intelligent Manufacturing 14: 287–296CrossRefGoogle Scholar
  11. Chytka T. M. et al (2006) An integrated approach to life cycle analysis. NASA Langley Research Centre American Institute of Aeronautics and Astronautics Inc. 3: 1–15Google Scholar
  12. Cushway, G. (2006). Availability contracting—making defence procurement smarter. Defence Management Journal (32).Google Scholar
  13. Dean, E. B. (1995). Parametric cost deployment. In Proceedings of the seventh symposium on quality function deployment (pp. 27–34). June, November, MI, USA.Google Scholar
  14. Dean, E. B., & Unal, R. (1992). Elements of designing for cost. In Proceedings of AIAA 1992 aerospace design conference, February, Irvine, CA.Google Scholar
  15. Del Valle C., Márquez A., Barba I. (2010) A CSP model for simple non-reversible and parallel repair plans. Journal of Intelligent Manufacturing 21: 165–174CrossRefGoogle Scholar
  16. Erlendsson, J. (2002). Value for money studies in higher education. http://www.hi.is/~joner/eaps/wh_vfmhe.htm Accessed 4 June 2009.
  17. GAO (2009). GAO cost estimating and assessment guide.-best practices for developing and managing capital program costs. United States Government Accountability Office http://www.gao.gov/new.items/d093sp.pdf. Accessed 20 June 2010.
  18. Gray, B. (2009). Review of acquisition for the defence secretary of state. Ministry of Defence. http://www.mod.uk/NR/rdonlyres/78821960-14A0-429E-A90A-FA2A8C292C84/0/ReviewAcquisitionGrayreport.pdf. Accessed 22 February 2010.
  19. Gupta, Y. P. (1983). Life cycle cost models and associated uncertainties. In F. J. K. Skwirzynski (Ed.), Electronics systems effectiveness and life cycle costing, NATO ASI Series (pp. 535–549). Berlin: Springer.Google Scholar
  20. Hancock K. E. (1993) Can pay? Won’t pay?’ or economic principles of affordability. Urban Studies 30(1): 127–145CrossRefGoogle Scholar
  21. Harvey, L., (2009). Analytic quality glossary. Quality Research International. Available from: http://www.qualityresearchinternational.com/glossary/valueformoney.htm. Accessed 2 June 2009.
  22. Harvey L., Green D. (1993) Defining quality. Assessment and Evaluation in Higher Education 18(1): 9–34CrossRefGoogle Scholar
  23. Kim E., Wells W. Jr, Duffey M. (2003) A model for effective implementation of earned value management methodology. International Journal of Project Management 21: 375–382CrossRefGoogle Scholar
  24. Li T., Cavusgil S. T. (1995) A classification and assessment of research streams in international marketing. International Business Review 4(3): 251–277CrossRefGoogle Scholar
  25. Marasco A. (2008) Third-party logistics: A literature review. International Journal of Production Economics 113(1): 127–147CrossRefGoogle Scholar
  26. Milne C. (2000) Affordability of basic telephone service: An income distribution approach. Telecommunications Policy 24: 907–927CrossRefGoogle Scholar
  27. Ministry of Defence (2005). Defence industrial strategy: Defense white paper. London: The Stationery Office (TSO), Cm 6697.Google Scholar
  28. Ministry of Defence (2008). A partnering handbook for acquisition teams. Ministry of Defence, Defence Commercial Directorate.Google Scholar
  29. NASA (2010). What is EVM? [Online]. Available from: http://evm.nasa.gov/. Accessed 1 August 2010.
  30. Nogal Miguel, S. (2006). Development for framework for Affordability Engineering Measurement. (MSc thesis), Cranfield, UK: Cranfield University.Google Scholar
  31. Ray, A., Baguley, P. & Roy, R. (2006). Developing a framework for affordability engineering. In The 4th international conference on manufacturing research (ICMR 2006) (pp. 11–16). Liverpool John Moores University, 5th–7th September 2006.Google Scholar
  32. Roy R., Cheruvu K. (2009) A competitive framework for industrial product service systems. The International Journal of Internet Manufacturing and Services 2(1): 4–29CrossRefGoogle Scholar
  33. Shields M. D., Young S. M. (1991) Managing product life cycle costs: An organizational model. Cost Management Autumn: 39–52Google Scholar
  34. Supply Chain21 (2009). 21st century supply chain awareness Presentation [Online]. http://www.sbac.co.uk/pages/80338686.asp. Accessed October 21, 2009.
  35. The Centre for Transit-Oriented Development and Centre for Neighbourhood Technology (2007). The affordability index: A new tool for measuring the true affordability of a housing choice. The Urban Markets Initiative, Market Innovation Brief [Online]. http://www.brookings.edu/reports/2006/01_affordability_index.aspx. Accessed 20 November 2007.
  36. Turoff, M. & Linstone, H. (2002). The delphi method techniques and applications. Reading, Mass.: Addison-Wesley Pub. Co., Advanced Book Program http://is.njit.edu/pubs/delphibook/. Accessed 28 January 2010.

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  • Oyetola Bankole
    • 1
  • Rajkumar Roy
    • 1
  • Essam Shehab
    • 1
  • Kalyan Cheruvu
    • 1
  1. 1.Decision Engineering CentreCranfield UniversityCranfield, BedfordshireUK

Personalised recommendations