Optimizing Positioning of Navy Wholesale Inventory
NAVAL POSTGRADUATE SCHOOL MONTEREY CA
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Naval Inventory Control Point NAVICP currently manages more than 210,000 line items to supply 957 customers worldwide. NAVICP positions these items within a distribution network of 22 Defense Depots operated by the Defense Logistics Agency DLA. NAVICP plans to reduce supply system distribution cost by optimizing their use of this distribution network. This thesis develops a heuristic algorithm that optimally positions line items to serve historical requisitions by Naval units over an 18 month period. Repositioning minimizes distribution costs subject to constraints on customer wait time and depot capacities. This model suggests a distribution scheme for 32,521 unique wholesale items from 22 depots to 126 aggregated customer regions worldwide. The Navy can reduce distribution cost by better strategic positioning of Navy wholesale inventory within the existing distribution network. The Navy can also achieve savings by positioning stocks at just a few locations, rather than at many, and by positioning items together in aggregate product groups, a policy that is widely admired in logistics.
- Logistics, Military Facilities and Supplies