Risk-Based ROI, Capital Budgeting, and Portfolio Optimization in the Department of Defense https://www.dau.edu
TABLE. REMAINING RELEVANT INFORMATION NEEDED TO RUN ALL PORTFOLIO OPTIMIZATION MODELS
MH-60R
$550
$30
$60
$400
$3
$2
8.1
1.2
9.11
CCOPS
$650
$5
$10
$300
$3
$2
1.27
2.5
1.43
Weather
$700
$35
$10
$350
$3
$2
5.02
7.5
5.65
SSDS
$1,000
$50
$20
$600
$3
$2
8.83
4.5
9.93
BMD
$2,000
$100
$20 $1,000
$3
$2
9.88
9.7
11.11
NIFC-CA
$1,000
$10
$20
$550
$3
$2
3.64
7.4
4.09
SPQ-9B
$2,000
$100
$20
$750
$3
$2
5.27
4.5
5.93
CIWS-CEC
$850
$75
$20
$550
$3
$2
9.8
7.5
11.02
RDDL
$1,500
$125
$20
$750
$3
$2
5.68
7.5
6.39
SM-2 BLK
$1,000
$125
$20
$550
$3
$2
8.29
8.5
9.33
Note. All monetary values are in thousands of dollars.
° “Short-TermBenefts” is the savings per year for the frst 5 years, stemming from reduction in stafng requirements, but these savings are deemed to be reabsorbed later on. Savings apply from 2018 to 2022. ° “Maintenance Savings” is the savings each year for all 10 years, starting in 2018, where systemmaintenance cost is reduced and saved. ° “Capital Cost” is applied in Year 0 or 2017 as a one-time capital expenditure. ° Assume a “Fixed [Direct] Cost” and constant “[Indirect] Operating Cost” per year for all 10 years starting in 2018. The new equipment upgrades will require some fixed overhead cost and operating expenses to maintain. The idea is that these will be less than the total sum of benefts obtained by implementing the capability.
88
Defense ARJ, January 2020, Vol. 27No. 1 : 60-107
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