The U.S. Navy wants to provide its shipbuilders with appropriate incentive to produce militarily effective vessels at minimum cost to the Navy. It can induce a shipbuilder to agree to any contractual arrangement by offering the shipbuilder a high enough price. But it is likely to be preferable,...

An availability-oriented approach has been developed to decide when to replace an aging system. For an existing system, it is optimal to operate another year if and only if the incremental cost per available year is less than the lifetime average cost per available year of a new aircraft. We...