Systems Engineering

Trade Study

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:


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


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:

What do Trade Study Support

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

AcqNotes Tutorial

AcqLinks and References:

Updated: 2/10/2024

Rank: G3.5

Leave a Reply