Trade Study - AcqNotes

A Trade Study is a decision-making study that identifies a preferred solution from a list of qualified solutions. The trade study will examine these solutions against criteria such as cost, schedule, performance, weight, system configuration, complexity, the use of Commercial Off-the-shelf (COTS), and many others. Trade Studies are performed throughout an acquisition program, from concept development through system design. In systems engineering, they’re primarily used to determine operational and system-level requirements.

Definition: A Trade Study is a decision-making method used to identify the best solution among a group of proposed solutions.

Purpose of Trade Studies

The purpose of trade studies is to support decision-making throughout the life cycle of a program. Trade studies are conducted among operational capabilities, functional and performance requirements, design alternatives and their related manufacturing, testing, and support processes; program schedule; and life-cycle cost to systematically examine alternatives. Once alternatives have been identified, a trade study team applies a set of decision criteria to analyze the alternatives. These criteria are ‘traded’ to determine the optimal and recommended alternative.

Trade Study Methodology

Most trade studies are not strictly formal or informal; they usually fall between these two extremes. Generally, formal trade studies are indicated for high-value, high-risk, or other high-impact decisions. Not all trade studies should follow the full rigor of a formal process but should be tailored to the specific circumstances of the program such as: [1]

Likelihood or severity of programmatic risk,
Objectivity and quantitative data used,
Details in available data, and
Time, effort, and money are needed to conduct the trade study.

How to Conduct a Trade Study

Conducting a trade study doesn’t have to be complicated. You are examining multiple courses of action (solutions) to a problem and choosing the best and most appropriate course of action. Here are a few steps in conducting a trade study.

Step 1: Define the problem – Make sure you address the actual problem, not a symptom.
Step 2: Define constraints on the course of actions (solutions).
Step 3: Develop multiple courses of action (solutions) for the problem
Step 4: Define evaluation criteria – How will you judge each course of action
Step 5: Determine weight factors
Step 6: Define the normalization scale
Step 7: Conduct the actual trade study analysis – use a spreadsheet to keep track of your analysis
Step 8: Perform Ranking – Determine the best actions to take and rank them from best to worst
Step 9: Choose the appropriate Course of Action (solution)

Trade Study Example

Trade Study: Motorboat vs. Sailboat

Trade studies are systematic evaluations used to compare different options against predefined criteria. Here’s an example trade study comparing the purchase of a motorboat versus a sailboat:

Criteria:

1. Initial Cost: The upfront cost of purchasing the boat.
2. Operating Costs: The ongoing expenses associated with maintenance, fuel, and other operational expenses.
3. Speed: The ability to navigate efficiently and effectively.
4. Resale Value: The potential value retained when reselling the boat in the future.

Trade Study Matrix Data:

A tabular representation known as a trade study matrix assesses components according to different metrics or criteria. When several competing requirements are involved in the choosing, it is especially helpful.

	Initial Cost	Operating Cost	Speed	Resale
Motorboat	$50,000	$5k per year	Fast	70% after 5 years
Sailboat	$40,000	$3k per year	Slow	60% after 5 years

Conclusion:

Based on the trade study evaluation, the motorboat is advantageous regarding speed, maneuverability, and resale value. However, the sailboat offers benefits in terms of initial costs and operating costs. The choice ultimately depends on the buyer’s priorities, intended use, skill level, and environmental concerns.

Trade Study Lessons Learned

Some possible lessons learned about conducting a trade study are:

Plan Ahead: A trade study requires time and resources to gather and analyze data, so it is important to plan ahead and allocate enough time and budget for the process. A trade study plan should include the scope, objectives, criteria, alternatives, evaluation methods, roles and responsibilities, schedule, and deliverables of the trade study.
Involve Stakeholders: A trade study should involve relevant stakeholders from different perspectives and backgrounds, such as customers, users, subject matter experts, decision-makers, and vendors. Stakeholders can provide valuable input, feedback, and buy-in throughout the trade study process ¹ ².
Define clear and measurable criteria: A trade study should use well-defined and measurable criteria to evaluate the alternatives. The criteria should reflect the objectives and constraints of the problem and be consistent, complete, independent, and non-redundant. The criteria should also be prioritized or weighted according to their importance ¹ ².
Use appropriate evaluation methods: A trade study should use suitable evaluation methods to compare the alternatives against the criteria. The evaluation methods should be objective, transparent, and repeatable. Some common evaluation methods are scoring, ranking, weighting, or trade-off matrices.
Document and communicate the results: A trade study should and succinctly present its findings and suggestions. The problem statement, objectives, criteria, alternatives, evaluation procedures, results, suggestions, assumptions, limitations, risks, and lessons learned should all be included in a trade study report. The report should also offer justification and supporting data for the choice.

What do Trade Study Support

Trade Studies support the following activities in the acquisition process and systems engineering:

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Updated: 2/10/2024

Rank: G3.5

Systems Engineering