The cost exchange ratio: A new aggregate measure of cost and operational effectiveness

Aggregate measures of performance have value to analysts and decision makers alike in comparing alternatives and variations on a common scenario. Traditional aggregate measures have included the Force Exchange and Loss Exchange Ratios. These measures are well defined for single system (homogeneous) scenarios, but require some aggregation methodology for a multiple system (heterogeneous) scenario. Different methodologies have been advanced to perform this aggregation in a purely operational context. An alternative aggregation methodology is cost of the systems and their ammunition. This permits the formation of a Cost Exchange Ratio which combines operational performance and operational cost to provide an aggregate measure of cost and operational performance. Combining this methodology with an operational aggregation methodology permits definition of a Normed Cost Exchange Ratio which permits comparison of the cost and operational performance of an alternative or variation force to an equivalent single system base force, thus avoiding the difficulty of making cost comparisons across cultures. Together, these two cost ratios provide an aggregate means for assessing cost variation in an operational context, thus facilitating modern acquisition decisions based on such considerations as Cost as an Independent Variable.