1. IMP Proprietary1 Multi-Period Phased Sparing & LCC By: Parker MacDonald Logistics Support Analyst IMP Aerospace IMP Aerospace, P.O. Box 970, Enfield, Nova Scotia, Canada B2T 1L5 Tel. 902. 873.2250 Fax 902 873 2290 e-mail. impaero@impgroup.com Website. www.impgroup.com November 2013

2. IMP Proprietary2 Who We Are 100% Privately Held Canadian Company founded in 1967 Headquartered in Halifax, Nova Scotia Over 4,500 Employees (> 2,500 in Nova Scotia) Operations Across Canada Dedicated Support to the Crown/PWGSC for over 30 Years Provide support to 6 RCAF aircraft fleets, including Optimized Weapons Systems Support to the Cormorant, C130 and CP140 Comprehensive avionics, component and structural manufacturing capabilities Extensive Engineering, ILS and Publications Capabilities Ready to provide support immediately Top 100 Best Companies to work for in Canada 2 IMP: Who We Are

3. IMP Proprietary3 Multi-Period (Phased) Sparing Schedule Change –Can change depending on numerous factors –May be planned to fluctuate from day 1 Change of Fleet Size Change in Operating Hours Analyzer not currently set up to accommodate life cycles with differing parameters during different periods.

4. IMP Proprietary4 Aircraft Schedule 2007 plan: –18 AC until 2015 2009 plan: –18 AC until 2015, 11 AC until 2025 2011 plan: –18 AC until 2020, 14 AC until 2030 Current plan = 18 AC total until 31 Dec 2015 and 14 AC between 1 Jan 2016 – 31 Dec 2030

5. IMP Proprietary5 Aircraft Schedule Changes 2011 (End 2025)# ACYFR Fiscal Year 818 AC6,500 Fiscal Year 918 AC6,500 Fiscal Year 1018 AC7,000 Fiscal Year 1118 AC7,000 2012 (End 2030)# ACYFR Fiscal Year 918 AC6,500 Fiscal Year 1016 AC6,500 Fiscal Year 1114 AC6,500 Fiscal Year 1211 AC6,500 2013 (End 2030)# ACYFR Fiscal Year 1018 AC6,000 Fiscal Year 1113 AC6,500 Fiscal Year 1211 AC6,500 Fiscal Year 1311 AC6,500 2005 (End 2010)# ACYFR Fiscal Year 2209,500 Fiscal Year 31910,000 Fiscal Year 4198,500 Fiscal Year 5188,500

6. IMP Proprietary6 Flying / Operating Hours Generally the Fleet Flying hours (FHrs) per year = 6,500hrs As the fleet size goes down, the AC must work longer, harder hours FHrs = Operating hours # ACYFR FHrs per Month 186,50030.1 146,50038.7 116,50049.2

7. IMP Proprietary7 Spares Required after Reduction DND has just informed us that the schedule for our AC has changed 20 AC, 6,500 Fhrs per year reduced to: 10 AC, 6,500 Fhrs per year Spares Required?

8. IMP Proprietary8 Spares Availability after Reduction

9. IMP Proprietary9 Or they end up here

10. IMP Proprietary10 Multi-Period (Phased) Sparing To gauge the number of spares required when you have differing parameters in multiple time periods you must create separate models for each period. Combine the results from each sparing analysis to get a final count. Period A spares + Period B spares =Total spares Required Sounds Simple?

11. IMP Proprietary11 Discards and PLT This is run with a Procurement Lead Time (PLT) of 6 months The Period is 3 years Analyzer says we need 7 spares. What is wrong with that statement?

12. IMP Proprietary12 Same 3 year model, but PLT of 37 months PLT of 37 months means new stock can’t be acquired Discarded units are included in New Stock required 3.42 Discards per year X 3 years = 10.26 units Add to the 3 units required = 13.26 units Discards and PLT

13. IMP Proprietary13 Most LRU’s and SRU’s will never have a discard rate of 3.42 per year But a discard rate of 0.2 per year, over 20 years = 4 units If that item is $100,000 each, that is a big deal Very useful for consumables Discards and PLT

14. IMP Proprietary14 Discards vs No Discards AC Main Landing Gear Tires –Wear Out at 200 FHrs –Each AC flies 360 FHrs per year With PLT set to 6 months (no discards included) = 30 tires until Dec 31, 2030. With PLT set to max (discards accounted for)= 772 Tires required At a cost of $1,000 each, you want to make sure you account for your discards.

15. IMP Proprietary15 Baseline Configuration No UDS Spares 20 AC Retirement Date Dec 31, 2030 (17 years) 9,600 Operating Hrs per Year = 40 Op Hrs/AC/Month 10 AC at East and West Coast Bases 3 LOM (1 st, 2 nd, Contractor) 98% Operational Availability

16. IMP Proprietary16 Baseline Spares Provisioning 17 year period (2030)

17. IMP Proprietary17 Stock on Hand This column shows how much should be on hand at all times for X% Operational Availability

18. IMP Proprietary18 Discards NAMESpares Req Discards per year Discards in Period (17 years) Total Spares Req LRU 110.00 1 LRU 241.6427.8832 (31.88) SRU 1A40.00 4 SRU 1B41.001721 SRU 2A10.213.575 (4.57) Total1463 How many spares required to make Retirement date of 2030? Original = 14 units = $38,700 Actual = 14 units + 49 discarded units = $228,200

19. IMP Proprietary19 205 month (17 year +1 month) PLT

20. IMP Proprietary20 Baseline Schedule Baseline Schedule has 20 AC, 9,600 FHrs per year 10 West Coast, 10 East coast 9,600 Operating Hrs per Year = 40 Op Hrs / AC / month Retirement date of Dec 31, 2030

21. IMP Proprietary21 New Schedule Dec 31, 2020: Fleet reduced to 10 AC Flying rate will remain 9,600 FHrs per year (fleet rate). More or less spares Required?

22. IMP Proprietary22 Two Models Period A 20 AC Jan 2014 – Dec 2020 9,600 FHrs per year 40 FHrs per month / AC Begin with 0 stock Period B 10 AC Jan 2021 – Dec 2030 9,600 FHrs per year 80 FHrs per month / AC Begin with SOH at end of Dec 2020

23. IMP Proprietary23 Period A: Jan 2014 – Dec 2020 We can see that the number of units required on hand at all times is the same as Period A, with no discards. LRU 2 – 12 Discards SRU 1B – 7 Discards SRU 2A – 2 Discards

24. IMP Proprietary24 Transition from A to B We must take the number of spares remaining (after discards) at the end of Period A (Dec 31, 2020) and put them in the stock on hand at the beginning of the Period B model (Jan 1, 2021). Item NameSpares remaining at end of 2020 LRU 11 SRU 1A4 SRU 1B4 LRU 24 SRU 2A1

25. IMP Proprietary25 Period A vs B Constants Period A 20 AC Jan 2014 – Dec 2020 9,600 FHrs per year 40 FHrs per month / PE Begin with 0 stock Period B 10 AC Jan 2021 – Dec 2030 9,600 FHrs per year 80 FHrs per month / PE Begin with SOH at end of Dec 2020

26. IMP Proprietary26 Period B: Jan 2021 – Dec 2030 Additional spares for all but SRU 1A because AC now working harder LRU 2 - 17 Discards SRU 1B - 10 Discards SRU 2A - 3 Discards

27. IMP Proprietary27 Period A + Period B Sparing Period APeriod BA+B NameUDSNewDiscardsUDSNewTOTAL LRU 1010112 LRU 2016-1241834 SRU 1A040404 SRU 1B011-741122 SRU 2A03-2147 Total035-21143469 To get UDS for Period B : (A New – A Discards) = B UDS To Calculate Total number of Spares Required: A New + B New = Total Spares Required

28. IMP Proprietary28 OoPS fORgoT This slide shows the outcome of not adjusting the FHrs / AC / Month. Uses 40FHrs instead of 80FHrs Make sure everything is updated correctly or you miss out on 19 spares and $74,000

29. IMP Proprietary29 Period B1: 14 AC 20 Fhrs This slide shows the outcome of a different Period B. Uses 20FHrs instead of 80FHrs Uses 14 AC instead of 10 AC

30. IMP Proprietary30 Life Cycle Cost (LCC) Adjust any LCC costs by the applicable inflation rate. Change the Replacement cost of the TOP LEVEL PE to $0 to avoid Acquisition costs in period 2

31. IMP Proprietary31 LCC Results LCC Cost Period A: $247,222 LCC Cost Period B: $69,131 Total LCC Cost: $316,353 Does not include the cost of spares purchased

32. IMP Proprietary32 Conclusions You must include Discarded or Consumable units in Total Spares required. Whatever stock you have at the end of one scenario is what you will have at the beginning of the next –Remember that if a spare is discarded, you can’t use that at the beginning of the next period. A reduction in Fleet size, does not automatically mean a reduction in spares or cost. This method requires you treat each time period as it’s own model.

33. IMP Proprietary33 Notes Yes, This process works the same way when you already have AV stock to begin With larger systems with more variance to the different parameters being used, you may not always arrive at the exact same number of spares vs discards, but you will be very close. If your system has no discards, then use the same process; stock at the end of Period A = UDS stock at the beginning of Period B

34. IMP Proprietary34 Questions? FIN