Accession Number:

ADA089653

Title:

Cost Effective Termination Policies D062 - Economic Order Quantity (EOQ) Items,

Descriptive Note:

Corporate Author:

AIR FORCE LOGISTICS COMMAND WRIGHT-PATTERSON AFB OH

Personal Author(s):

Report Date:

1980-07-01

Pagination or Media Count:

33.0

Abstract:

This study of termination policies is the result of a GAO audit report that claims the current Air Force policy results in permissive overstockage. Simulation of the EOQ system is used to show the need for a buffer zone before termination notices are generated. It also demonstrates that when a termination notice is generated, it is better to adjust the purchase request so that the inventory position equals the requirements objective than it is to cancel the entire purchase request. Although the simulation shows that the Army, Air Force and DLA policies are all more cost effective than the GAO recommendation, the results did not prove that any services policy was more cost effective than the others. Thus, the final recommendation is that the Air Force should continue to use its current policies to generate termination notices. Also the Air Force should handle termination notices by adjusting the purchase request so the inventory position equals the requirements objective. This is a change from their current policy of adjusting the purchase request so the inventory position equals the termination level. Author

Subject Categories:

  • Economics and Cost Analysis
  • Logistics, Military Facilities and Supplies

Distribution Statement:

APPROVED FOR PUBLIC RELEASE