Suppose the Navy is considering two minesweeping alternatives to replace awaiting a new fleet to be delivered
Question:
Suppose the Navy is considering two minesweeping alternatives to replace awaiting a new fleet to be delivered in 2027. Whichever interim alternative is chosen, that altemative will have to be maintained through 2027, then can be scrapped. The alternatives, and the status quo are outlined below:
a. Status quo: Four aging minesweeper vessels. Beginning in FY 16, the combined annual O&S cost to maintain the four ships is $75M ($18.75M per ship). It is expected that due to further aging and degradation, this O&S cost will increase by SSM ($1.25M per ship) every two years.
b. Refurbishment: There are three older minesweepers scheduled for retirement in FY 17 that, with some improvements, can perform the same functions as the four aging minesweepers, but they will need a substantial refurbishment. s for a total of $200M. The expected refurbishment cost profile is $63.1 M in FY18, $105.5M in FY 19, and $31.4M in FY20. When the three older ships are brought back online in 2021, after refurbishment, their expected O&S cost will be a total of SISM per year for all three vessels (SSM per ship). Of course, until that time, the four aging minesweepers will remain active, and the Navy will continue to operate and maintain them.
c. New Acquisition: The other alternative is to acquire two advanced gap filler minesweepers. The concept design phase for these two vessels is complete. If this alternative is chosen, it will require two more years of R&D ($10M in FY 16 and SISM in FY17). The two ships can then be procured for S540.1 M with the following expected outlay profile:
FY18: $34.8M
FY19: $94.8M
FY20: $128.3M
. FY21: $127.9M
FY22: $96.7M
FY23: $48.7M
FY24 $8.9M
Upon delivery in 2025, the combined annual O&S cost for these two ships is expected to be only $10M per year ($5M per ship). However, until these two ships are delivered, the Navy will continue to operate and maintain the four aging minesweepers.
The Mine Warfare program office has asked for an economic analysis of these three alternatives. Four key attributes have been determined that will affect mine warfare readiness during the 2025 to 2027 time frame. They are (1) number of vessels available between 2025 and 2027 (more is better); (2) search rate (in square nautical miles/vessel/day); (3) cruising range (in nautical miles); and (4) top speed (in knots). Furthermore, the program office has established importance weights for these four attributes for use in the economic analysis.
These metrics are displayed in the table below:
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra