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The purpose of this study is to introduce the effective and logical approaches for estimating acquisition costs using analogy method. In order to apply analogy method, proper factors or rates to compare with similar systems have to be defined. However, it is often difficult to acquire these rates from historical data of similar weapon systems.
In this study, we suggested a more accurate model for estimating acquisition costs by including domestic research & development cost and foreign purchase price. To find out the appropriate development cost of the target systems or sub-assembly level, we introduced a cost adjustment coefficient using PRICE model. PRICE, a computer-aided parametric cost analysis tool, analyzes and shows the development, production, operation, and support costs for a particular weapon system. Secondly, we suggested another way to estimate reasonable purchase price using regression analysis with recognized leading price-drive variables such as specifications and performances.
Finally, we applied the proposed method to an actual missile cost analysis project, and showed the result. The proposed method was proven to be useful in estimating the acquisition cost and purchase price.