The following production cost data for 23 historical missile systems has been collected by your team of

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Question:

The following production cost data for 23 historical missile systems has been collected by your team of analysts from a variety of sources and should be used for problems 1-5:

System	Nomenclature	Production Quantity	Avg Unit Cost ($M)	FY	Length (m)	Diameter (mm)	Launch Weight (kgs)
AIM-120 A-C	AMRAAM	270	0.347	2004	3.7	177.8	152
MGM-140A	ATACMS	789	0.782	2002	3.96	609.6	1700
XM-141	BDM	253	0.014	2005	0.823	81.28	7.3
RIM-162A	ESSM	26	1.643	2005	3.81	254	297
AGM-114K	HELLFIRE II	220	0.099	2003	1.65	177.8	45.3
AGM-158A	JASSM	71	0.632	2004	4.27	457.2	1021
FGM-148	JAVELIN	4271	0.091	2006	1.22	127	12.25
GBU-31/32	JDAM	21294	0.034	2006	3.9	457.2	932.5
AGM-154A-C	JSOW	35	0.807	2008	4.08	335.28	483
AGM-114L	LB HELLFIRE	2530	0.099	2002	1.74	177.8	49
M-26	MLRS ER	485	0.393	2004	3.69	228.6	293
AGM-119B	PENGUIN	36	1.053	2002	3.2	284.48	370
AGM-130A-C	POWERED GBU-15	18	1.094	2002	3.93	457.2	1323
AIM-54	Phoenix	358	0.497	2004	4	380	460
RIM-116A	RAM	81	0.517	2007	2.81	127	73.5
AGM-142A-D	RAPTOR	14	1.482	2002	5.76	520.7	1361
CBU-97B	SFW	281	0.451	2004	2.32	406.4	421
AIM-9X	SIDEWINDER	157	0.475	2005	2.89	127	86
AGM-84H	SLAM-ER	41	0.971	2006	4.36	342.9	663.5
RIM-156A	SM-2 ER	33	4.235	2004	6.55	347.98	1497
RIM-66C	SM-2 MR	88	1.764	2008	4.69	347.9	706
RGM-109E	TAC TOMAHAWK	29	2.358	2004	5.58	518.16	1814.4
BGM-109A-D	TOMAHAWK	581	1.873	2003	6.25	520	1600

The table above has been included as an attachment to the final, 'Prob 1-5 inputs.xlsx'.

1. (5 points) Normalize the Average Unit Cost of each data point to FY23$M using the Inflation Indices on the last page.

2. (10 points) Using the normalized data from Problem 1, calculate the unit theory theoretical first unit costs (T1) for each data point. Assume each program experienced a 79% learning rate.

3. (15 points) Now that you have a database of T1s, lengths, diameters, and launch weights, develop a CER of the form that predicts T1. Try each independent variable, one at a time, and choose the best CER. There is no need to try any combination of variables, just test each of the three independently. Use GERM. Be sure to show all work, and indicate the best CER, your reason(s) for selecting it, and its relevant statistics.

4. (10 points) Now, assuming your best CER was Y = 0.110*X^1.271, develop a cost estimate for the theoretical first unit cost (T1) of the new NPS-3011 missile. The design parameters are given below:

Length: 5.89 m

Diameter: 390 mm

Launch wt: 1370 kgs

What is your estimate for T1? What is the standard deviation of your estimate of T1?

5. (10 points) Using your estimate for T1 (from (4)), calculate the total production cost of the first 75 NPS-3011 missiles assuming an 79% unit theory learning curve. Also calculate the average unit cost of the first 75 missiles.