Research Summaries

Back Analysis of Pricing Model in the Defense Industry to Support Cost Projections

Fiscal Year 2015
Division Research & Sponsored Programs
Department Naval Research Program
Investigator(s) Lin, Kyle Y.
Sponsor NPS Naval Research Program (Navy)
Summary The defense industry is a unique market, with a major buyer (U.S. Government), several secondary buyers (foreign governments), and a handful of major suppliers (defense contractors such as Boeing, Northrop Grumman, and Lockheed Martin). The procurement process of advanced aviation systems, such as FA-18, MH-60, and F-35 aircraft, is vulnerable to many market inefficiencies shared by monopoly and monopsony. This project aims to develop mathematical models to describe the relationships and interactions among the stakeholders in the defense industry, and apply decision theory and game theory to analyze the models. The research goal is twofold: (1) Explain why the development and manufacturing of advanced aviation systems are often subject to program cost increases and delays; and (2) Identify market mechanisms to improve the efficiency of the bidding and contracting process in order to better manage risk.
Keywords Defense industry Pricing models Game theory
Publications Publications, theses (not shown) and data repositories will be added to the portal record when information is available in FAIRS and brought back to the portal
Data Publications, theses (not shown) and data repositories will be added to the portal record when information is available in FAIRS and brought back to the portal