medical and physical standards for which a trade-off analysis might be useful.

High school graduate status is associated with attrition. Recruits with a high school diploma are valued because years of research and experience show that those with a high school diploma are more likely to complete their initial three years of service, as shown in Table 3-2.

The better retention associated with those who complete high school saves money. According to an estimate by the U.S. General Accounting Office (1997, 1998) the cost of first-year attrition is in the range of $15,000-$35,000. In our examples, we use an estimate of $20,000 as the cost of first year attrition. On one hand, this argues for recruitment of those who are most likely to adjust to the rigors of military life and stay the course. The high school diploma is a reliable indicator of “adaptability” and “perseverance.” On the other hand, if all nongraduates are excluded from the enlistment pool, it forces recruiters to draw from the pool of graduates, and these individuals may be more expensive to recruit because they may have more opportunities for jobs elsewhere. This problem is compounded if one adds aptitudes to the mix and wants to exclude (or minimize) those with low aptitude scores.

The objective of a cost-performance trade-off optimization model is to choose an enlistment cohort that minimizes the cost of recruiting, training, and compensating the cohort, subject to meeting staffing goals by occupation over the first term of service. The complexity of this formulation may exceed what is necessary for setting most medical or physical standards, but the basic concept can be applied to setting any standard.

The intuition underlying the model is relatively straightforward. Since high school graduates leave the military prematurely at lower rates, they generate more staff years per recruit and lower training cost. However, the additional cost of recruiting high school graduates is greater than that of nongraduates, at the mix typically recruited. The optimization model implicitly makes trade-offs between the higher staff years and lower training costs of the high school graduate recruits and the lower recruiting cost, but also lower staff years and greater attrition, of nongraduate recruits. The graduate/nongraduate mix of recruits the model chooses is that which meets staffing goals most efficiently.¹