Model for Evaluating the Cost Consequences of Deferring New System Acquisition Through Upgrades

摘要

This paper, supported by the Central Research Program at the Institute for Defense Analyses (IDA), establishes important decision rules for comparing upgrading existing systems to buying new ones. It addresses the important issues crucial to deciding whether to upgrade or buy a new system, with an emphasis on cost and the expected or known structural lifetime of the upgraded system. If the lifetime is unknown, the methodology can also be used to estimate the lifetime needed to warrant an upgrade vice a replacement with a new system. Finally, the methodology allows an acquisition/upgrade program to be defined for the future that would keep costs to a minimum. The methodology is sufficiently general to apply to a wide range of systems.