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Resource efficiency in aircraft production

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  • Banani Dhar
  • Thomas R. Gulledge

Abstract

This article examines measures of economic efficiency in aircraft production. In particular, a type of nonlinear frontier estimation is contrasted with more traditional methods for estimating a dynamic cost function. This cost function is grounded in economic theory, and it is consistent with knowledge of the aircraft‐production process. The model includes the effects of both learning and production rate on total program costs. The usefulness of the model is demonstrated with an example that relates to the acquisition of military equipment. It is shown through various sensitivity analyses that an alternative procurement policy for an aircraft program could have resulted in increased efficiency and hence a lower total program cost to the government.

Suggested Citation

  • Banani Dhar & Thomas R. Gulledge, 1988. "Resource efficiency in aircraft production," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(3), pages 443-458, June.
  • Handle: RePEc:wly:navres:v:35:y:1988:i:3:p:443-458
    DOI: 10.1002/1520-6750(198806)35:33.0.CO;2-U
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    References listed on IDEAS

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    1. Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
    2. Sherwin Rosen, 1972. "Learning by Experience as Joint Production," The Quarterly Journal of Economics, Oxford University Press, vol. 86(3), pages 366-382.
    3. Norman Keith Womer, 1979. "Learning Curves, Production Rate, and Program Costs," Management Science, INFORMS, vol. 25(4), pages 312-319, April.
    4. John F. Muth, 1986. "Search Theory and the Manufacturing Progress Function," Management Science, INFORMS, vol. 32(8), pages 948-962, August.
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