The Costs and Effectiveness of Reenlistment Incentives in the Navy

Franklin M. Fisher and Anton S. Morton
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Franklin M. Fisher: Massachusetts Institute of Technology, Cambridge, Massachusetts
Anton S. Morton: Arthur D. Little, Inc., Cambridge, Massachusetts

Operations Research, 1967, vol. 15, issue 3, 373-387

Abstract: A nonlinear dynamic model was developed to investigate trade-off between costs and effectiveness of raising the first-term reenlistment rate. Costs per longevity year were determined for the Navy with present incentives and reenlistment rates. Survey responses were used to estimate reenlistment rates for additional incentives, and added costs were determined. In order to measure the operational effectiveness of the Navy, relative impact factors for four usefulness classes were derived from weighted average estimates made by experienced supervisors. A Cobb-Douglas utility function expressed operational effectiveness, both actual and required, as a multiplicative function of the number of men in each usefulness class. Effectiveness requirements that could be achieved by a Navy of specified characteristics were set up for a 30-year time frame. For each incentive situation, the model, using an iterative convergence solution, derived the optimal pattern of annual recruit inputs—the pattern that would at least achieve effectiveness goals, at minimal present discounted cost. The sensitivity of results to assumptions was tested. The optima were compared, indicating which incentives would at least achieve the effectiveness requirements at minimum cost.

Date: 1967
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