January 2020
• Using the ROV PEAT software, Monte Carlo risk simulations were run on the main inputs based on the Air Force Cost Analysis Agency Handbook (AFCAA Handbook) and used to interpret the dynamic results. • Portfolio optimization algorithms were run using budgetary and project constraints, and efcient frontier analyses based on changing budgets were then executed. Finally, OPNAV requirements, KVA valuation, and other noneconomicmilitary values were used to runmulti-criteria portfolio optimizations.
The following are the parameters of the ACB programunder consideration: For all models, we assumed a 10-year time horizon for the cost savings (all future savings past Year 10 after discounting will be assumed to be negligible). The discounting base year is 2017 (Year 0 andCapital Investment is required in 2017), whereas immediate savings and short-termbenefts and maintenance savings start in Year 1 (2018). This means Year 10 is 2027.
° The following Table shows the remaining relevant information needed to run the models. “Savings Now” is the immediate monetary cost savings benef its obtained by implementing the new upgraded system (e.g., lower overhead requirements, reduced parts and labor requirements). This amount is applied in the frst year of the cash fow streamonly (Year 1 or 2018), as its efects are deemed to be immediate.
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Defense ARJ, January 2020, Vol. 27No. 1 : 60-107
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