The Application of Quantity Discounts in Army Procurements.

reportActive / Technical Report | Accession Number: ADA066583 | Open PDF

Abstract:

The Department of Defense DOD has directed the use of basic Economic Order Quantity EOQ principles in the acquisition of secondary items. One assumption of the EOQ model is that there is no control over acquisition price yet, it has been established that the unit price of an item is not always independent of the quantity procured. The approach taken in this study included a review of the Quantity Discount QD program as implemented by the Air Force, and the development of a total variable cost equation to evaluate offers in response to a QD solicitation. A QD program in the Army is expected to result in reductions in both acquisition cost and long run administrative workload. A proposed QD program has been developed and it is recommended that a test be conducted at one or more Materiel Readiness Commands to determine the degree of success a full QD program can be expected to accomplish.

Author(s):
Zabel, Wayne V. ; Gajdalo, Steven
Author Organization(s):
ARMY PROCUREMENT RESEARCH OFFICE FORT LEE VA
Descriptive Note:
Final rept.,
Pagination:
0033

Security Markings

DOCUMENT & CONTEXTUAL SUMMARY

Distribution:
Approved For Public Release

RECORD

Collection: TR
Identifying Numbers
Report Number(s):
APRO-706-1/IRO-254
 Subject Terms
Joint Capability Areas:
JCA_5_Command and Control; JCA_4.2_Supply; JCA_4.2.3_Manage Global Supplier Networks; JCA_1_Force Support; JCA_4.5_Operational Contract Support; JCA_4.5.1_Contract Support Integration; JCA_5.3_Planning; JCA_5.4_Decide; JCA_5.6.3_Assess Achievement of Objectives; JCA_5.6_Monitor; JCA_1.2_Force Preparation; JCA_5.4.3_Establish Rule Sets; JCA_1.1.1_Global Force Management; JCA_1.1_Force Management; JCA_4_Logistics; JCA_1.2.3_Educating; JCA_3.2_Engagement; JCA_3_Force Application; JCA_3.2.1_Kinetic Means; JCA_1.2.5_Lessons Learned; JCA_1.2.6_Concepts
Modernization Areas:
Space
Communities of Interest:
Human Systems
Descriptor(s):
*ARMY PROCUREMENT, ACQUISITION, QUANTITY, REDUCTION, COSTS, INVENTORY, SAVINGS
Field(s)/Group(s):
Administration and Management, Economics and Cost Analysis, Logistics, Military Facilities and Supplies
Keyword(s):
Discounted costs, Quantity discount
Report Date:
1979 Mar 01