Value-Based Multidisciplinary Optimization for Commercial Aircraft Design

Traditional commercial aircraft design attempts to achieve improved performance and reduced operating costs by minimizing maximum takeoff weight. From the point of view of an aircraft manufacturer, however, this method does not guarantee the financial viability of an aircraft program. A better design approach would take into account not only aircraft performance but also factors such as aircraft demand, market uncertainty, and development and manufacturing cost. This paper outlines a design method resulting in an optimization framework to consider both performance and finance in aircraft program design. The optimization procedure couples a simplified aircraft performance model with a program valuation technique based on real options theory to address uncertain market demand. This new methodology is then applied to an aircraft design example. Results include comparison of performanceand financial-optimal designs, as well as sensitivity analyses to quantify the effects of technical uncertainty on business risk. INTRODUCTION The historical choice of minimizing gross take-off weight (GTOW) as the objective in aircraft design is intended to improve performance and subsequently lower operating costs, primarily through reduced fuel consumption. However, such an approach does not guarantee the profitability of a given aircraft design from the perspective of the airframe manufacturer. In an increasingly competitive market for commercial aircraft, manufacturers may wish to design for improved financial viability of an aircraft program, as well as technical merit, before undertaking such a costly investment. To assess the long-term financial impact of an aircraft program, a value-based approach is recommended. Such an approach might still account for performance while also incorporating the following elements to assess predicted cash flows into and out of the program: manufacturing and development costs; product demand; operating cost to the customer; and market factors, such as competition, uncertainty, and expected growth. A valuation methodology has been proposed that draws on financial options theory and uses dynamic programming to estimate the costs, price, and demand associated with a previously optimized aircraft design. By accounting for market uncertainty and addressing the idea of managerial flexibility, this methodology allows the user to calculate an optimal value for an aircraft program. Further, quantifying market uncertainty directly allows for a more explicit accounting of perceived program risk, as opposed to traditional valuation techniques that rely on an assumed discount rate on future cash flows generated by a program. The valuation technique is detailed in the next section, “Program Valuation.” In this paper, coupled performance/financial design is effected by incorporating the valuation methodology into the design optimization process, as shown in Figure 1 (fig. 2). Using simple financial models, a framework has been created that couples a higher-order performance model with financial estimation tools and an algorithm for computing expected program value. A single program concept incorporating technical design as well as financial parameters can then be optimized in terms of specific performance or business goals, e.g., minimizing GTOW or maximizing program value. These individual modules are described, along with the overall optimization framework, in the third and fourth sections: “Simulation Model” and “Optimization Framework.” The model was then used to solve for financially optimal designs of a single aircraft, a Boeing 777-class airliner. The number of passengers and aircraft range were chosen to make up the design vector. Aircraft manufacturers and airlines alike often view the basis of value in commercial aircraft in terms of range and carrying capacity when making a decision on what kind of aircraft to manufacture or purchase. Single-objective optimization was carried out using program value, as measured in terms of expected net present value (NPV), as the objective to be maximized. Comparisons may then be made to the actual design of the 777 to identify the potential tradespace between performanceand value-based optimization, * Correspondence: Ryan Peoples, [email protected], 617-253-8367