Creating and Applying Total Cost Model: A Case Study at Maritime Company for Last Time Buy Estimation

Abstract

Kongsberg Maritime (KM) experiences growth in the number of reactive obsolescence events. Time constraints in the decision‐making process limit options on how to resolve obsolescence. The total cost trajectory of labor and money consumed to resolve obsolescence is not sustainable for KM going forward. Last time buy (LTB) is one of many tools in obsolescence management. LTB is attractive because it does not require reengineering, requalification, or redesign. Despite its benefits, LTB should only be used if the total cost of LTB outweighs other alternatives. In this study a model was created to predict component obsolescence and quantifying the total cost of LTB. The research assumes obsolescence management less effective when dominated by LTBs. By proactively using this model, decision‐makers can evaluate alternatives compared to LTB selecting the most cost‐effective solution. Feedback from decision‐makers confirms a need to have, and willingness to use, the model.