Thursday, February 6, 2014

Moving Average Is A Better Indicator Of 787 Production


January numbers are in for Boeing 787 delivery. The true financial number for measuring output. Delivery takes into account all stops and goings on with the Boeing machine of production. A Boeing aircraft moves off the floor in under thirty days but languishes for months until disposition. Here is a 90 day moving average of that disposition which truely reflect a better picture of obstacles encountered  before getting into customer hands.

Month/Year       Delivered             90-day Moving Average Number
October/2013            9                              8.3
November/2013        5                              6.7
December/2013       11                             8.3
January/2014             4                             6.7

The 90 day average smooths out time and numbers when an aircraft is going out the door, it receives additional time for readiness or additional time from the customer is required. If it moves out and is counted as built, it may sit additional weeks into the next month.A moving average captures those anomalies and smooths it into a relative time frame of those production barriers not usually accounted for by Boeing.

An October built 787 may deliver in December. Those December delivered 787 may have frames from the preceding 90 preceding days of which they were built and ready for delivery. They may be built in October and counted as part of the 10 787 built that month, but additional work from both Boeing and the customer may continue for some time. Making the delivery date a more accurate count time for production since it captures all production steps until customers takes possession. That is why some months deliver 11 and some only 4 even though Boeing says it builds ten.

If one averages on a 90 day delivery cycle, an assumption is made that within a 90 day frame work of time, a monthly average smooths outs those impediments to production with a realistic number. Boeing chooses a build rate of when it is rolled out the door during the month cutting off all outside issues from the ten build plan per month.  Statistical measures can tell many stories. When the moving average hits 10 from month to month, I would say Boeing is on target. If Boeing delivers 120 787 in 2014, then they mean what they say.