A Value-Based MDO Approach to Assess Business Risk for Commercial Aircraft Design

Abstract

Traditional commercial aircraft design attempts to achieve improved performance and reduced operating costs by minimizing maximum takeoff weight, but this approach does not guarantee the financial viability of the program to the manufacturer. Improved design practices would take into account not only aircraft performance but also financial aspects of the design. A methodology has been developed for multidisciplinary design optimization (MDO) involving performance and finance jointly in an aircraft program. This value-based MDO framework couples a performance model with an improved stochastic program valuation, accounting explicitly for both uncertain demand via market volatility and managerial flexibility by invoking Real Options theory. Stochastic program value is used as the new objective for the design optimization problem. The value-based methodology and framework are applied to an aircraft design example for the Blended-Wing-Body (BWB) concept. The effects of varying the aircraft range and speed on maximum-value solutions demonstrate that incorporating value into the design process permits more fully-informed program decisions that have optimal financial impact. For the BWB, increasing the range past 9000 nmi and cruise speeds above Mach 0.85 offer diminishing benefits in terms of profitability. Sensitivity analyses are then used to quantify the impact of technical and financial uncertainty on the optimal stochastic value. By varying individual program parameters, insight is gained into the relative business risk associated with each. Results indicate that ensuring long-term cash flows should be emphasized despite possibly higher development costs. Further analyses show that a deterministic valuation is inappropriate for evaluating program profitability. Risk is not addressed adequately through the choice of discount rate, leading the optimizer to make poor design tradeoffs focused instead on short-term gains.