Spacecraft obsolescence: Modeling, value analysis, and implications for design and acquisition

Abstract

Obsolescence is a distinctive state of both (physical) products and information, and it is commonly defined as the condition of being outdated or no longer useful. For the U.S Department of Defense (DoD), obsolescence is a serious matter that affects a host of military systems, by making it challenging to procure specific parts needed to build or repair them. For commercial engineering systems, obsolescence is an important determinant of the loss of competitive edge or advantage. System obsolescence is in part due to the tension between the increasingly longer design lifetimes of systems on the one hand, and the shorter life cycles of the underlying technologies embedded in the systems on the other hand. Faster changes in market needs and expectations are also important drivers of system obsolescence. As such, obsolescence and technology innovation are dual concepts that mirror each other in an inverse or negative relationship. In this work, we investigate two related issues: the notion of system obsolescence in general, and its particular manifestation in the case of spacecraft. Our objective is to contribute to a better understanding of this phenomenon and its consequences in general, and of spacecraft obsolescence in particular. This understanding is a necessary first step for better managing and mitigating the risk of obsolescence. To this effect, we first provide a multidisciplinary literature review of obsolescence, from economics to operations research. We then examine obsolescence as it pertains to engineering items and its relationship to product lifecycle. Since we are concerned in this work with system obsolescence instead of component obsolescence, we do not examine “cohort effects” such as sales volume of a given item, as is traditionally done in the literature on the subject. Instead, we focus on the value generated by a single system, and we connect obsolescence with the loss of remaining system value. We argue that obsolescence decreases the value delivery profile of a system over time, and we develop the analytics to support and illustrate this proposition. We adapt our obsolescence model to spacecraft and examine various consequences of the onset and intensity of obsolescence on the spacecraft value. We provide several recommendations based on our findings. We introduce an obsolescence map as a visualization tool to help rank different payloads for which obsolescence mitigation ought to be prioritized. We make the case that the time to peak of the net value of a system, given its exposure to obsolescence, ought to be an important consideration when selecting an “optimal” design lifetime for the system. We also suggest that the value implications of system obsolescence can serve as a valuation standard for obsolescence mitigation strategies and provide an upper bound on the willingness-to-pay for their implementations (e.g., flexible payloads).

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