Demand Forecasting: DLA'S Aviation Supply Chain High Value Products
NAVAL POSTGRADUATE SCHOOL MONTEREY CA GRADUATE SCHOOL OF BUSINESS AND PUBLIC POLICY
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This study set out to provide the Defense Logistics Agency DLA a set of demand forecasting and risk modeling tools and techniques to help both achieve target service levels and quantify the risk of stock-outs in the DLA aviation supply chain. This vision culminated in a simple process that all together takes between 1 to 2 hours to understand a product s demand volume, pattern, probability distributions as well as quantifying the risk of stock-outs. Perhaps an easier way to think about this study is that it became a discussion about buying the right stuff at the right quantity and at the right time. The result of this study is the recommendation of three actions to 1 identify the few stock items that have the greatest impact on the organization s annual budget 2 use the forecasting and risk modeling technique described herein to calculate adequate inventory for the target service levels and 3 execute a lean six sigma project to reduce drivers for the organization s risk exposure. A higher risk exposure influences the decision to carry more safety stock thus creating a vicious cycle of increased material costs.
- Economics and Cost Analysis