Helsinki University of Technology Systems Analysis Laboratory Portfolio Analysis in the Portfolio Analysis in the Cost-Efficiency Evaluation Cost-Efficiency Evaluation of Weapon Systems of Weapon Systems 7 July 2009 23 rd European Conference on Operational Research in Bonn Jussi Kangaspunta, Juuso Liesiö and Ahti Salo Systems Analysis Laboratory Helsinki University of Technology P.O. Box 1100, 02015 TKK, Finland [email protected]
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Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems
Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems. 7 July 2009 23 rd European Conference on Operational Research in Bonn Jussi Kangaspunta, Juuso Liesiö and Ahti Salo Systems Analysis Laboratory Helsinki University of Technology P.O. Box 1100, 02015 TKK, Finland - PowerPoint PPT Presentation
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Helsinki University of Technology Systems Analysis Laboratory
Portfolio Analysis in thePortfolio Analysis in theCost-Efficiency Evaluation of Cost-Efficiency Evaluation of
Weapon SystemsWeapon Systems
7 July 2009
23rd European Conference on Operational Research in Bonn
Feasible portfolios that are not dominated by any less or equally expensive portfolio
Kangaspunta, Liesiö and Salo: Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems 6
Helsinki University of Technology Systems Analysis Laboratory
Numerical Example Based on Realistic DataNumerical Example Based on Realistic Data
Three weapon systems
– Only unit costs
Three impact criteria measuring different types of enemy casualties
Incomplete information on the value (i.e. relevance) of the impacts
Analysis of different budget levels with a focus on cost-efficient portfolios
Kangaspunta, Liesiö and Salo: Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems 7
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Helsinki University of Technology Systems Analysis Laboratory
Simulated and Interpolated Impact FunctionsSimulated and Interpolated Impact Functions
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Helsinki University of Technology Systems Analysis Laboratory
Impacts of Weapon System PortfoliosImpacts of Weapon System Portfolios
9Kangaspunta, Liesiö and Salo: Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems
Helsinki University of Technology Systems Analysis Laboratory
Composition of Cost-Efficient PortfoliosComposition of Cost-Efficient Portfolios
10Kangaspunta, Liesiö and Salo: Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems
Helsinki University of Technology Systems Analysis Laboratory
ConclusionsConclusions
Portfolio approach is necessitated by strong interactions
→ Evaluation of individual weapon systems makes little sense
These interactions are captured by the combat simulator results
Multi-criteria model aggregates several impact dimensions– Contextual importance of impacts captured through incomplete information
Cost-efficiency depends on both impacts and costs
→ Focus on the computation of cost-efficient portfolios
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Helsinki University of Technology Systems Analysis Laboratory
ReferencesReferences
Brown, G.G., Dell, R.F., Newman, A.M. (2004). Optimizing Military Capital Planning, Interfaces Vol. 34, No. 6, pp. 415-425.
Bunn, D.W., Salo, A.A. (1993). Forecasting with Scenarios, European Journal of Operational Research, Vol. 68, pp. 291-303.
Fox, P. (1965). A Theory of Cost-Effectiveness for Military Systems Analysis, Operations Research, Vol. 13, No. 2, pp. 191-201.
Liesiö, J., Mild, P., Salo, A. (2007) Preference Programming for Robust Portfolio Modeling and Project Selection,European Journal of Operational Research, Vol. 181., No. 3., pp. 1488-1505.
Liesiö, J., Mild, P., Salo, A. (2008) Robust Portfolio Modeling with Incomplete Cost Information and Project Interdependencies, European Journal of Operational Research, Vol. 190, pp. 679-695.
Stafira, S., Parnell, G., Moore, J., (1997). A Methodology for Evaluating Military Systems in a Counterproliferation Role, Management Science, Vol. 43, No. 10, pp. 1420-1430.
Parnell, G., et. al. (1998). Foundations 2025: A Value Model for Evaluating Future Air and Space Forces,Management Science, Vol. 44, No. 10, pp. 1336-1350.
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Questions and Comments ?Questions and Comments ?
Kangaspunta, Liesiö and Salo: Portfolio Analysis in the Cost-Efficiency Evaluation of Weapon Systems 13
Helsinki University of Technology Systems Analysis Laboratory
Extensions and Further ResearchExtensions and Further Research
Considering multiple operating situations
– Cost-efficiency is highly context dependent
– Can be integrated to model for instance using probabilities
– Risk and/or robustness measures for portfolios can be formed
Complementing simulation data with expert evaluations
– Simulations can be augmented with judgmental expert evaluations of impacts
– Experimental design of simulations and/or expert evaluations
Considering cost-efficiency using core indices
– “What proportion of evaluations supports that a given portfolio is cost-efficient?”
– “What proportion of possible operating situations supports that a given portfolio is cost-efficient?”
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