Question: You have gathered data on fifty relevant programs and now need to develop a cost estimate. (See below for the 75 observations) 282 355 327
You have gathered data on fifty relevant programs and now need to develop a cost estimate. (See below for the 75 observations)
| 282 |
| 355 |
| 327 |
| 477 |
| 343 |
| 389 |
| 485 |
| 312 |
| 325 |
| 414 |
| 391 |
| 372 |
| 383 |
| 463 |
| 255 |
| 347 |
| 461 |
| 498 |
| 292 |
| 431 |
| 420 |
| 241 |
| 441 |
| 514 |
| 278 |
| 305 |
| 288 |
| 325 |
| 383 |
| 323 |
| 322 |
| 267 |
| 347 |
| 315 |
| 432 |
| 423 |
| 300 |
| 354 |
| 266 |
| 402 |
| 378 |
| 333 |
| 336 |
| 288 |
| 337 |
| 366 |
| 284 |
| 552 |
| 317 |
| 292 |
| 311 |
| 271 |
| 578 |
| 372 |
| 421 |
| 383 |
| 357 |
| 329 |
| 330 |
| 321 |
| 231 |
| 463 |
| 307 |
| 484 |
| 371 |
| 420 |
| 303 |
| 299 |
| 339 |
| 342 |
| 340 |
| 572 |
| 360 |
| 276 |
| 273 |
a) Is the apparent distribution plausibly lognormal? How did you come to that conclusion?
b) What are the unit mean and standard deviation? Also, if the distribution is lognormal, what are the transformed mean and standard deviation?
c) Construct a plot (use a lower bound of $100 M and an upper bound of $800 M) of the distribution probability density function (pdf). Indicate the mean value with a plotted vertical line at the appropriate value.
d) What is the coefficient of variation (CV) of this cost estimate?
e) Suppose the program office has budgeted $350M for this program. Plot this budget level on the pdf developed in part c). Given your cost probability distribution, calculate the probability of a cost overrun for the budgeted $350M.
f) The Weapon Systems Acquisition Reform Act of 2009 recommends budgeting to the 80th percentile of the cost probability distribution. Calculate and plot the 80th percentile of your cost estimate on the pdf.
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