Naval Combat System Product Line Architecture Economics

Acquisition Research Program Sponsored Report SeriesSponsored Acquisition Research & Technical ReportsA Model-Based Systems Engineering (MBSE) approach has been developed at the Naval Postgraduate School that integrates parametric cost and product modeling methods for economic trade-off analysis of system product lines. The research assesses the economic consequences of DoD product line options and has been refining a framework for others to use and adapt. This report provides details of the methodology and its application to several empirical case studies. The modeling framework includes a reference architecture and cost model for a general combat system product line that is extensible to other DoD and government domains. It has been applied to assess the economics of Navy combat system product line architecture approaches in coordinated case studies. The case studies were performed for a three-tier cruise missile system, the Aegis ship software product line, and an Anti-Submarine Warfare (ASW) cross-domain product line architecture for air, surface, and sub-surface applications. An overall business case analysis for DoD product line practices was performed synthesizing the case studies with recommendations generated.Approved for public release; distribution is unlimited.Approved for public release; distribution is unlimited

Implementation issues in product line scoping

Often product line engineering is treated similar to the waterfall model in traditional software engineering, i.e., the different phases (scoping, analysis, architecting, implementation) are treated as if they could be clearly separated and would follow each other in an ordered fashion. However, in practice strong interactions between the individual phases become apparent. In particular, how implementation is done has a strong impact on economic aspects of the project and thus how to adequately plan it. Hence, assessing these relationships adequately in the beginning has a strong impact on performing a product line project right. In this paper we present a framework that helps in exactly this task. It captures on an abstract level the relationships between scoping information and implementation aspects and thus allows to provide rough guidance on implementation aspects of the project. We will also discuss the application of our framework to a specific industrial project

Pricing Damaged Goods

Companies with market power occasionally engage in intentional quality reduction of a portion of their output as a means of offering two qualities of goods for the purpose of price discrimination, even absent a cost saving. This paper provides an exact characterization in terms of marginal revenues of when such a strategy is profitable, which, remarkably, does not depend on the distribution of customer valuations, but only on the value of the damaged product relative to the undamaged product. In particular, when the damaged product provides a constant proportion of the value of the full product, selling a damaged good is unprofitable. One quality reduction produces higher profits than another if the former has higher marginal revenue than the latter

Software cost estimation

The paper gives an overview of the state of the art of software cost estimation (SCE). The main questions to be answered in the paper are: (1) What are the reasons for overruns of budgets and planned durations? (2) What are the prerequisites for estimating? (3) How can software development effort be estimated? (4) What can software project management expect from SCE models, how accurate are estimations which are made using these kind of models, and what are the pros and cons of cost estimation models

On our Knowledge of Markets for Knowledge ― A Survey

At the Lisbon Summit 2000 the EU set herself the goal of transforming the European Union by 2010 into “the most competitive and dynamic knowledge based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”. I take this statement as a starting point for this paper for two reasons: On the one hand it acknowledges the crucial role of knowledge in an advanced economy. On the other hand, it raises the question what needs to be done in order to achieve this ambitious goal. In particular, since the EU is also committed to a market economy and the maintenance of competition the question arises how well markets function with respect to the creation and distribution of knowledge, and what measures may be required, either to support the market mechanism or to replace it by some other institutions. This article deals with the ?rst question and offers a survey of the problems encountered in markets dealing with knowledge. In the next section I discuss briefly the role of knowledge and information in economics. After that I point out a few difficulties with finding a precise and generally accepted definition of knowledge. Section 4 is the core of the article and discusses various types of market failures which might occur when the commodity produced and traded is knowledge. I conclude with a few suggestions for further research

Network industries in the new economy

In this paper we discuss two propositions: the supply and demand of knowledge, and network externalities. We outline the characteristics that distinguish knowledge- intensive industries from the general run of manufacturing and service businesses. Knowledge intensity and knowledge specialisation has developed as markets and globalisation have grown, leading to progressive incentives to outsource and for industries to deconstruct. The outcome has been more intensive competition. The paper looks at what is potentially the most powerful economic mechanism: positive feedback, alternatively known as demand-side increasing returns, network effects, or network externalities. We present alternative demand curves that incorporate positive feedback and discuss their potential economic and strategic consequences. We argue that knowledge supply and demand, and the dynamics of network externalities create new situations for our traditional industrial economy such that new types of economies of scale are emerging and "winner takes all" strategies are having more influence. This is the first of a pair of papers. A second paper will take the argument further and look at the nature of firms' strategies in the new world, arguing that technology standards, technical platforms, consumer networks, and supply chain strategies are making a significant contribution to relevant strategies within the new economy

Problem-Solving Behaviours, Organisational Forms and the Complexity of Tasks

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