A manufacturing software engineer at a major aerospace corporation has been assigned the management responsibility of a project to design, build, test, and implement AREMSS, a new-generation automated scheduling system for routine and expedited maintenance. Reports on the disposition of each service will also be entered by field personnel, then filed and archived by the system. The initial application will be on existing Air Force in-flight refueling aircraft. The system is expected to be widely used over time for other aircraft maintenance scheduling. Once fully implemented, enhancements will have to be made, but the system is expected to serve as a worldwide scheduler for up to 15,000 separate aircraft. The engineer, who must make a presentation next week of the best estimates of costs

Question

over a 20-year life period, has decided to use the life-cycle cost approach of cost estimation. Use the following information to determine the current annual LCC at 6% per year for the AREMSS scheduling system.

What will be an ideal response?

Answer 1

PW of LCC = – 2.6(P/F,6%,1) – 2.0(P/F,6%,2) – 7.5(P/F,6%,3) – 10.0(P/F,6%,4)
-6.3(P/F,6%,5) – 1.36(P/A,6%,15)(P/F,6%,5) -3.0(P/F,6%,10)
- 3.7(P/F,6%,18)
= – 2.6(0.9434) – 2.0(0.8900) – 7.5(0.8396) – 10.0(0.7921) -6.3(0.7473)
– 1.36(9.7122)(0.7473) -3.0(0.5584) - 3.7(0.3503)
= $-36,000,921
AW of LCC = -36,000,921(A/P,6%,20)
= -36,000,921(0.08718)
= $-3,138,560