A Classroom Exercise to Examine the Trade-off between Mission Capacity and Life Cycle Cost

摘要

This article presents a classroom exercise, centered on a simulation that has been used for 4 years in an MBA program to help students develop an understanding of the trade-offs involved in managing capital assets in the public sector. Though often ignored in business schools, mission is a key criterion that must be considered when managing such assets, and acts as a surrogate for profit. The case presents a rich environment in which the impact of cost reductions (or additional investments) on mission can be quantified, and trade-offs can be assessed and discussed. It gives students a chance to develop creative ideas for process improvement, and provides sufficient data for them to analyze the impact of their suggestions in a rigorous way.