Abstract:In case of restrictive defense budget financing, efficient and effective use of funds is now more than ever becoming a crucial question in functioning of the Ministry of Defense and Serbian Armed Forces (MoD and SAF). Any investment in acquisition of arms and military equipment (AME) due to financial significance does not allow mistakes in decision making. Qualitative analysis of cost of assets through the entire programmed lifecycle is a complex multi-disciplinary and multi-criteria problem whose solving requires application of the model multi-criteria optimization. In our operational practice thus far, solving the said problems, there wasn't enough the model multi-criteria optimization so the optimal results were lacking. In this paper investment process of AME in the MoD and SAF was analyzed, from the point of cost treatment in the process, its flaws have been pointed out and a more comprehensive -integrated approach has been suggested.