Analysis of marginal cost of durability and cost per day: a first step towards a rational choice of durability

Abstract

This paper makes the case that the analysis of the marginal cost of durability is a pre-requisite for addressing the durability choice problem. This observation is sometimes forgotten in the economic literature on durable goods, or dismissed by making an unrealistic assumption of zero marginal cost of durability. The details of a marginal cost of durability analysis are system specific. A satellite example is discussed to illustrate the essence, and to provide a quantitative application of said analysis. First, the impacts of the durability requirement on different subsystems onboard the spacecraft are quantitatively explored; that is, how the different subsystems (power, propulsion, thermal, etc.) scale with increased durability. Second, the effects of durability on the different subsystems are integrated and a typical satellite cost profile is provided as a function of durability. The result represents the marginal cost of durability of a satellite. In addition to the satellite example, two related metrics are introduced, the cost elasticity of durability and the cost per day, which allow a clear understanding and visualization of the economies of scale, if any, that result from extended durability. This paper contributes a necessary first step towards a rational choice of durability for engineering systems from a customer's perspective

Keywords:

• Durability
• Design life time
• Marginal cost
• Cost per day
• Satellite design

Additional information

Notes on contributors

Joseph H. Saleh

Email: [email protected]