Optimizing Navy Wholesale Inventory Positioning

Naval Inventory Control Point NAVICP manages more than 186,000 Depot Level Repairable DLR line items in its wholesale inventory. It positions this materiel within a distribution network of 23 Defense Logistics Agency Depots and the privately owned Premium Transportation Facility PTF. NAVICP plans to reduce materiel distribution time and optimize use of the distribution network to comply with mandated reductions in requisition response time. This thesis develops an Integer Linear Program ILP that positions one or more line items to achieve minimum distribution time subject to cost and other constraints. It derives a 57 line item test set composed of DLRs most likely to benefit from re-positioning items with recent and projected demand and low weight. It also finds a simplified six-mode transportation scheme and an aggregated customer scheme that renders an ILP that is simple to use and captures the relationships that exist within the distribution network. Extensive analysis of the distribution network using the ILP indicates the Navy can cut response time and distribution cost by better strategic positioning of wholesale inventory within the existing network. These savings can be achieved by increasing use of PTF and considering use of storage depots not co-located with Navy activities.