Using Monte Carlo simulation as support for decision making while negotiating a PBL contract

In connection with performance-based logistics (PBL) contracts for aircraft fleets it is very important to carefully analyse both operations and maintenance before and during the contract negotiation phase. Monte Carlo Simulation is a valuable methodology in this context since it allows delimiting and exploring a complex parameter space in a transparent and relatively easily visualized manner. With timely analyses it is possible to identify both technical and economic risks and minimize the possible consequences, a process that benefits both parties in the negotiation process. This paper describes a part of this process in connection with the negotiation of a PBL contract for the Swedish Air Force SAAB 105 (SK 60) trainer fleet between Saab AB and the Swedish Defence Materiel Administration (FMV). The information used in the simulations was largely empirical data derived from previous operations of the aircraft system. The main factors that were simulated were operational requirements, fleet size, spares inventories, turn-around times, failure rates and influence of extraneous factors (e. g. weather). The simulations resulted in considerable savings due to reduction of the active fleet size, and increased reclamation of surplus spares and units from retired aircraft.

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