Abstract for: Using System Dynamics to Estimate Reductions in Lifecycle Costs Through Investments in Improved Reliability
“Doing more with less” has become a long-running and recurring theme across the globe. Affordability is now a key metric for operations and sustainability, and reliability is now seen as a key driver of these lifecycle costs. A system dynamics model has been developed of an aviation supply chain that enables evaluation of alternative cases in which investments are made to improve reliability, lower total demands, and reduce spending on new procurement and overhaul over the lifecycle. It is shown that the payback potential of an investment depends upon annual demand for the part, cost of the part, percent improvement in reliability achieved, and any increase in cost of the part due to the re-design. The analysis show that returns can be high and payback periods can be fast, particularly for investments to improve reliability of items with high demand and high cost. The research also indicates that close coordination is needed between program management, procurement planning and acquisition in order to fully realize savings. Ongoing research is developing reliability investment strategies and estimates for lifecycle costs under differing demand, manufacturing and overhaul scenarios.