Date of Award

9-1994

Document Type

Thesis

Degree Name

Master of Science in Cost Analysis

First Advisor

Roland Kankey, PhD

Abstract

The goal of this research was to analyze the effect of fixed costs on learning curve calculations. The research focused on two general research areas. The first area addressed the identification of current cost analysis practice for handling fixed costs in learning curve calculations. After identification of current practice, the unit learning curve models AXb ability to estimate total production run costs for a new production run when the slope was derived from both total cost and variable cost historical lot data was examined. Historical lot cost data was simulated for both the total cost and variable cost cases under three slopes, three fixed cost percentages, and three lot sizing profiles. The second area addressed the predictive ability, measured by mean absolute deviation MAD, of the AXb model versus the SAFFMC model FQ AXb when fit to total cost lot data. Comparisons between both models under different conditions were addressed through ANOVA. Three main findings: 1) there are a variety of practices when handling fixed costs in learning curve calculations, 2) the AXb model by itself was inadequate for production run total cost estimating, and 3) the SAFFMC model was superior to the AXb model under all conditions.

AFIT Designator

AFIT-GCA-LAS-94S-6

DTIC Accession Number

ADA285040

Comments

Co-authored thesis.

The authors' Vita pages are omitted.

Presented to the Faculty of the School of Logistics and Acquisition Management of the Air Force Institute of Technology.

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