Lockheed Tri Star and Capital Budgeting1 In 1971, the American aerospace company, Lockheed, found itself in Congressional hearings seeking a $250
19671968196919701971 Time “Index” t=0 t=1 t=2 t=3 t=4 Cash Flow ($ millions) -$100 -$200 -$200 -$200 -$200 According to Lockheed testimony, the production phase was to run from the end of 1971 to the end of 1977 with about 210 Tri Stars as the planned output. At that production rate, the average unit production cost would be about $14 million per aircraft.2 The inventory- intensive […]
