Professional Documents
Culture Documents
Dimitri N. Mavris
Daniel P. Schrage
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American Institute of Aeronautics and Astronautics
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American Institute of Aeronautics and Astronautics
Program
review
Conceptual
Design
Program
review
Preliminary
Design
Program
review
Detail
Design
Production
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American Institute of Aeronautics and Astronautics
RDT&E
Recurring Production
Manufacturing
Airframe
2
Prop
Tails
Propulsion
Structure
O & S Costs
Sustaining
Avionics
Assy
Fee
F/E
Fuselage
Wing
Skin
Panels
Gear
Internal
Structure
Nacelles
Secondary
Structure
i
A = F
(4)
n
(1
+
i)
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American Institute of Aeronautics and Astronautics
i
A = P(1 + i) n
(5)
n
(1
+
i)
i(1 + i) n
= P
n
(1 + i) 1
(6)
n
A = A1 + G
(7)
n
i (1 + i) 1
This annual equivalent amount can easily be converted
to a present or future equivalent by discounting
backwards or forwards, respectively.
In other situations, annual cash flows may increase
or decrease as functions of time by a constant
percentage, g. The formula that gives the present value,
P, of a constantly increasing series, in terms of the first
annual flow, F1, g, and n is given in equation (8).
F (1 + g' ) n 1
(8)
P = 1
1 + g g' (1 + g' ) n
where:
1+ i
g' =
1
(9)
1+ g
is the geometric-gradient-series factor. Equation (8) can
be converted to an annual or future equivalent value if
desired.
Continuous Compounding Interest
Equations (1) through (5), (7), and (8) can also be
applied for periods that are not annual. As long as i and
n have consistent temporal variables, other
compounding periods (e.g., semiannually or quarterly)
may be used. In some situations, it is a reasonable
assumption that continuous compounding of interest
provides a better model than does annual compounding.
Calculation of the limit as the number of compounding
periods per year becomes infinitely large (and,
correspondingly, the period of compounding becomes
infinitesimally small) will yield the previous formulas
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American Institute of Aeronautics and Astronautics
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American Institute of Aeronautics and Astronautics
propulsion
month 1
month 13
month 25
month 60
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American Institute of Aeronautics and Astronautics
month 72
month 1
(order)
month 50
month 61
(delivery)
3%
down
payment
20 %
distributed payments
month of
order
77 %
delivery
payment
month of
delivery
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American Institute of Aeronautics and Astronautics
9
American Institute of Aeronautics and Astronautics
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American Institute of Aeronautics and Astronautics
FUC scale
factor
89.2%
95.7%
100%
104.3%
110.8%
RDT&E
Total
base - 25%
19991.2
base - 10%
20028.2
base wing
20052.8
base + 10%
20077.4
base + 25%
20114.3
Production
Operational vehicles
Airframe spares
Engine spares
Sustaining engineering
Sustaining tooling
Ground support equip
Technical data
Misc. equipment
Initial transportation
Fee
Total
base - 25%
59797.6
6204.6
5084.7
13331.6
3638.4
8969.6
1196.0
23.9
344.0
26619.4
125209.7
base - 10%
63019.1
6495.5
5084.7
13331.6
3638.4
9452.9
1260.4
23.9
362.5
27720.6
130389.4
base wing
65166.7
6689.3
5084.7
13331.6
3638.4
9775.0
1303.3
23.9
374.8
28454.7
133842.5
base + 10%
67314.4
6883.2
5084.7
13331.6
3638.4
10097.2
1346.3
23.9
387.2
29188.8
137295.6
base + 25%
70535.8
7174.1
5084.7
13331.6
3638.4
10580.4
1410.7
23.9
405.7
30290.0
142475.3
264.5
274.1
280.3
286.7
296.2
Price ($M)
Table 2. The price is determined by summing the nonrecurring and recurring production costs (including the
fees and spares) and dividing by the total number of
aircraft produced. The manufacturer's cash flows were
calculated for this array of prices. A selling price
corresponding to the desired rate of return for the
manufacturer was calculated.
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American Institute of Aeronautics and Astronautics
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American Institute of Aeronautics and Astronautics
Conclusions
The preliminary results presented in this paper were
based on assumed design or process alternatives that
change the manufacturing costs of the wing. The
results are promising and warrant the future inclusion of
the bottom-up cost estimates of the wing for
definitively calculating the cost differences associated
with various material, fabrication, and assembly
procedures. As a by-product of this research, the
benefits (in cost reductions or increased revenues)
incurred as a result of technology improvements will be
directly assessed. It will then be possible to objectively
compare the magnitude of their effects to the effects of
economic factors over which the manufacturer (and the
airlines) have no control.
There is usually a conflict between cost-effective
choices and affordable choices for alternative designs.
Today, the desire for cost-effectiveness is often sacrificed
to the practical considerations of the available funding.
With the development of more complex and
comprehensive life cycle cost models that can accept and
process multifidelity data within an integrated design
environment, it will be possible to better calculate the
cost-effectiveness and affordability of future systems.
Then it may be possible to design systems that are
ultimately cost-effective, yet still affordable.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Future Work
The required knowledge and databases for the use of
the CERs for the wing component fabrication and
assembly costs will be incorporated into the integrated
design environment in which the other design tools are
being used. After the integration, cost-effectiveness and
profitability trade-offs will be conducted. In addition,
the Annual Equivalent Asset Cost may be encoded in
ALCCA for the airlines' economic analyses. The
geometric-gradient-series equation, as given in equation
(8), may be modified to provide a more complex model
of inflation for those elements in the life cycle for
which inflation is not currently used.
Acknowledgments
This research is being funded under a NASA Langley
Graduate Student Researchers Program (GSRP)
Fellowship (NGT-51101). NASA Langley direction is
provided by S. M. Dollyhigh and P. G. Coen at
Langley Research Center in Hampton, Virginia. Tom
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American Institute of Aeronautics and Astronautics
25000
15000
10000
5000
0
-5000
-10000
1995
1997
1999
2001
2003
Year
2005
2007
-15000
2009
Millions of dollars
20000
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American Institute of Aeronautics and Astronautics
RDT&E
Manufacturing
Sustaining
Income
Annual Cashflow
200000
150000
125000
RDT&E
Manufacturing
Sustaining
Income
Net Cashflow
1995
1997
1999
Year
2001
2003
2005
2007
100000
75000
50000
25000
0
-25000
2009
35000
30000
25000
2009
2007
2005
2003
2001
1999
1997
20000
15000
10000
5000
0
-5000
-10000
-15000
-20000
Millions of dollars
125%
100%
75%
110%
90%
1995
Millions of dollars
175000
Year
Figure 8: Manufacturer's Net Cumulative Cash Flows (for scaled wing costs)
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American Institute of Aeronautics and Astronautics
800
45
800 units
700
35
550 units
600
400 units
30
500
25
400
550 units
20
300
15
12%
200
10
400 units
100
5
$ 266.7 M
0
200
250
300
350
400
450
0
500
Price ($M)
Figure 9: Manufacturer's ROI (solid lines) and Break-even Unit (dotted lines)
vs. Production Quantity and Price
35
600
75%
30
500
125%
25
75%
400
15.1 %
300
20
15
12.0 %
Breakeven Unit
125%
200
10
8.9 %
100
5
$ 266.7 M
0
200
250
300
Price ($M)
350
0
400
Figure 10: Manufacturer's ROI (solid lines) and Break-even Unit (dotted lines)
vs. Scaled Wing Cost and Price
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American Institute of Aeronautics and Astronautics
Breakeven Unit
40
Return on Investment (%)
800 units
0.24
0.21
0.18
0.15
$/RPM
0.12
TOC
0.09
DOC
0.06
IOC
0.03
0
0
1000
2000
3000
4000
5000
6000
7000
0.08
16
0.079
14
$0.15/RPM
TOC
12
$0.14/RPM
ROI (%)
0.076
$0.13/RPM
0.075
6
0.074
$0.12/RPM
0.073
0.072
0.071
-2
265
0.07
280
295
310
325
Price ($M)
340
355
370
Figure 12: Airline ROI and TOC (dashed line) vs. Average Yield and Price
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American Institute of Aeronautics and Astronautics
TOC ($/ASM)
0.077
10
8
0.078
Interest
Depreciation
EBT
Income Tax
Net Earnings
Net Cash Flow
Annual Revenue
Operating Costs
110
70
50
30
10
2012
-10
2008
Year
-30
2004
2000
1996
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American Institute of Aeronautics and Astronautics
-50
Millions of dollars
90