Bending the Cost Curve: Moving the Focus from Macro-level to Micro-level Cost Trends with Cluster Analysis
Journal of Cost Analysis and Parametrics
Bending the cost curve has become the ambiguous jargon employed in recent years to emphasize the notion of changing unwanted cost trends. In response to the planned $1 trillion Department of Defense budget reduction over the next six years, the Air Force has launched its own Bending the Cost Curve initiative in an effort to reduce cost growth. A principal concern with Bending the Cost Curve initiatives and research to date is the central focus on aggregate cost trajectories which can obscure the true underlying growth curves which require attention. In response, the authors apply a novel growth curve clustering approach to identify underlying cost curve behavior across the Air Force enterprise. They find that micro-level growth curves vary greatly from the aggregate cost curves. Furthermore, they illustrate how this approach can help decision-makers to direct their focus, proposals, and policy actions toward specific growth curves that must be bent.
Bradley C. Boehmke is an Operations Research Analyst at Headquarters Air Force Materiel Command, Studies and Analyses Division. He is currently completing his PhD at the Air Force Institute of Technology (AFIT) through the Department of Operational Sciences with a focus on Strategic Cost Analytics. He received his M.S. in Cost Analysis from AFIT and a B.S. in Human Physiology and Aerospace Engineering from North Dakota State University. His research interests are in the areas of cost analysis, economic modeling, decision analysis, and developing applied modeling applications through the R statistical language.
Dr. Alan W. Johnson is an associate professor of logistics and supply chain management with the Department of Operational Sciences, Air Force Institute of Technology (AFIT). He received his Ph.D. from the Virginia Polytechnic Institute and State University in 1996, an M.S. in systems engineering management from AFIT in 1989, and a B.S. in mechanical engineering from Montana State University in 1982. His research interests are in the areas of discrete event simulation modeling, design of experiments, and heuristic search methods applied to applications in space logistics and air transportation systems.
Dr. Edward D. White is a Professor in the Department of Mathematics and Statistics. He has served as a member of the AFIT faculty since the summer of 1998. Dr. White received his B.S. in Mathematics from the University of Tampa, his M.A.S. in Applied Statistics from The Ohio State University, and his Ph.D. in Statistics from Texas A&M University. His work has been published in various journals such as the Air Force Journal of Logistics, Journal of Cost Analysis and Management, Defense Acquisition Review Journal, Cost Engineering, Journal of Public Procurement, and the Journal of Cost Analysis and Parametrics, where he has previously served as co-editor. His primary research interests include statistical modeling and simulation.
Dr. Jeffery D. Weir is an Associate Professor in the Department of Operational Sciences at the Air Force Institute of Technology. He received his PhD in Industrial and Systems Engineering from Georgia Tech. He teaches courses in decision analysis, risk analysis, and multi-objective optimization. His research interests are in the areas of decision analysis and transportation modeling. As a former ofﬁcer in the US Air Force, he has worked on a wide variety of projects ranging from scheduling and routing air-craft, determining the value of future intelligence information, assessing the impact of FAA regulation changes to passenger and aircrew safety, and mode selection for multi-modal multi-commodity distribution networks. He has received grants from the Defense Intelligence Agency, US Transportation Command, Air Force Materiel Command, the Joint Improvised Explosive Device Defeat Organization, Air Force Research Laboratory and Pacific Northwest National Laboratory, amongst others.
Dr. Mark A. Gallagher, a Senior Level executive, is the Technical Director, Studies and Analyses, Assessments and Lessons Learned, Headquarters U.S. Air Force, Washington, D.C. This directorate conducts analyses for both the Secretary and Chief of Staff of the Air Force that ensures comprehensive, defendable and time-sensitive processes underpin Air Force warfighting and force structure capability and sufficiency assessments. The directorate also informs and illuminates leadership on emerging issues; fireproofs resource investment decisions; and rapidly collects, disseminates, implements and tracks lessons learned. Dr. Gallagher earned a B.S. in operations research and computer science from the US Air Force Academy. He also earned an M.S. and PhD in operations research from the Air Force Institute of Technology, where he later taught and continues as Adjunct Associate Professor.