Accounting for Residual Value and the Probability of War When Estimating Cost-To-Effectiveness Ratios for Evaluating Alternative Military Weapon Systems

David Wollover
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David Wollover: Applied Research, Inc.

Chapter 7 in Cost Analysis and Estimating, 1991, pp 143-154 from Springer

Abstract: Abstract This paper is concerned with Cost and Effectiveness studies that contrast weapon system candidates for specific missions within the context of a simulated broader war scenario. The following two issues are examined: (1) The concept of a weapon system’s Residual Value for inclusion to calculating cost-effectiveness ratios, and (2) Introduction of the influence of the Probability of War upon how the cost of war is counted toward cost-effectiveness study results. The conclusion of this paper is that cost-effectiveness modelling should consider both the most probable war scenario which will occur if deterrence fails as well as a sustained peacetime. It is hoped that this paper will invite beneficial debate surrounding the alternatives for linking cost and effectiveness indices.

Keywords: Effectiveness Index; Replacement Cost; Weapon System; Specific Mission; Hypothetical System (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-1-4612-3202-5_7

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DOI: 10.1007/978-1-4612-3202-5_7

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