From: wingo%cspara.decnet@Fedex.Msfc.Nasa.Gov
Newsgroups: sci.space
Subject: Re: Stupid Shut Cost arguements (was Re: Terminal Velocity
Date: 2 Jan 1993 17:12 CST
Organization: University of Houston
Distribution: world
NNTP-Posting-Host: judy.uh.edu
News-Software: VAX/VMS VNEWS 1.41    

In article <1992Dec31.181253.6849@iti.org>, aws@iti.org (Allen W. Sherzer) writes...
>In article <30DEC199220055213@judy.uh.edu> wingo%cspara.decnet@Fedex.Msfc.Nasa.Gov writes:
> 
>>I would dearly love to see your cost analysis on this Allen. Since the 
>>marginal cost for a Shuttle mission is only 37 million dollars, this is
>>what it would cost for a reflight.
> 
>I work in the real world Dennis. That means I simply cannot pick and choose,
>like you can, which costs I pass on and which I don't. The cost of a Shuttle
>flight IS a minimum of $550 million. nothing you say about marginal costs
>will change that. Tell us Dennis, exactly who is going to pay the share
>of the overhead you have decided not to charge to this mission?
> 

From all of the posts that I have seen in the last few months from you, it
seems that you live in Allen's world. This world is where you pick and choose
your own numbers and play them the way you want to make your systems look
desirable. I have said many times and I say again I support the DC series, it
is just your accounting that are unrealistic, as you forget to charge against
your vehicle, what you so decry me for not doing with the Shuttle.

>In your world apparently you can simply ignore that flights share of the
>overhead. You can['t do that in the commercial world without going out
>of buisness.
> 

The simple point that I was trying to make that you totally missed is that
the marginal cost as described in the November 28-December 9 issue of 
space news for adding another mission is 37 million dollars maximum. This goes
for all costs directly associated with a shuttle flight including personnel.
I merely pointing out that they could refly for that cost. The overhead would
be there whether they flew the extra mission or not. It is ironic that, if 
they did fly an extra flight to refly a payload like we have been speaking
about would lower the amortized cost per mission for the total system.

>Do you know what the marginal cost of a Corvette is? I'll bet it's less
>than $2,000. When you can persuade General Motors to sell you a new
>Corvette for the marginal cost of one then I'll let you use the marginal
>cost of a Shuttle flight.
> 

If GM makes 1000 or 50000 Corvettes, their overhead remains pretty much the
same.  There is a simple formula that is learned in every calculus class that
allows you to predict both the break even point and the optimum point of
production for corvettes to make the most money. 

The shuttle, if it had made it's advertized claims  of flying every two weeks
would, if flying commercial payloads, be profitiable, since the marginal
cost of the mission is far less than the cost of competing systems such as
Titan IV and Arianne IV or V.  This is the core problem with shuttle. It does
not fly enough to pay off, in the same manner that if you do not build 
enough Corvettes, the overhead in labor, physical plant, and materials will
exceed the profit made on the car resulting in a loss.

It is truly unfortunate that the shuttle will never make its original intended
flight rate, but your comment merely reinforces my point, which is that
the true cost of reflight is cheap relative to using other systems, with the
added bonus that the total system cost is lower due to a higher utilization
factor. The overhead is there whether the system flys or not, as the overhead
at GM is there whether they make cars or not. This is why they are closing
plants, to reduce overhead on marginally profitable or money losing car lines.

Dennis, University of Alabama in Huntsville



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