Figure 4-15 Estimating Manufacturing Plant Investment Costs for recurring production units are estimated by applying production learning credits to the labor portion of cost and SSP market-driven effects to reduce material costs based on the magnitude of the SSP required production levels versus projected production levels without SSP. An optimum unit mass can be derived using this approach; however, this does not address effects from integration and test which would be more complicated for multiple smaller unit sizes compared to fewer larger units. At this point in the SSP assessment, unit sizes should come from the SSP Space Segment Model which would eliminate the unit mass cost optimization step. The initial investment in manufacturing facilities is then estimated based on the total expected revenue from producing SSP hardware (total production cost for all SSP units to be manufactured). The investment in manufacturing must take allowances for maintenance, upgrades, and profit into consideration and subtract costs for these items from the total expected revenue. Fixed percentages of 7% for maintenance, 7% for upgrades, and 15% for profit are typical values and can be thought of as margin for the manufacturer. These values can be modified with additional insight into specific manufacturing processes and approaches. 4.4.2. Issues and Limitations The selected approach differs significantly from what was used in the 1979/1980 Reference Study, where the emphasis was placed on defining detailed manufacturing capabilities first, and then calculating resulting production costs. Due to rapidly improving manufacturing practices, this approach would be very difficult to implement for concepts that would be deployed 15 to 20 years in the future. The selected approach focuses on most likely production costs in the future, and then backs into a manufacturing estimate based on expected revenues from production units.
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