A Model for Determining Economic Retention Levels of Expendable Inventory Items
Abstract
This study proposes a model which could be used by the Air Force Logistics Command (AFLC) to compute economic retention levels for expendable type items managed under the D062 Buy Computation System. The major difference between the proposed model and previous retention level models is in the treatment of storage, obsolescence, and interest costs. Storage cost is applied to the item price when holding costs are computed. Obsolescence and interest costs are applied to the item's net salvage value to represent the opportunity cost incurred when an item is not disposed. A sensitivity analysis shows that the model is relatively sensitive to the storage cost factor and the net salvage factor. The model is relatively insensitive to changes in demand rate and the opportunity cost factor described above.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1975
- Accession Number
- ADA016345
Entities
People
- Clare D. Heidler
- William R. Harris
Organizations
- Air Force Institute of Technology