Cost Effective Termination Policies D062 - Economic Order Quantity (EOQ) Items,

Abstract

This study of termination policies is the result of a GAO audit report that claims the current Air Force policy results in permissive overstockage. Simulation of the EOQ system is used to show the need for a buffer zone before termination notices are generated. It also demonstrates that when a termination notice is generated, it is better to adjust the purchase request so that the inventory position equals the requirements objective than it is to cancel the entire purchase request. Although the simulation shows that the Army, Air Force and DLA policies are all more cost effective than the GAO recommendation, the results did not prove that any services policy was more cost effective than the others. Thus, the final recommendation is that the Air Force should continue to use its current policies to generate termination notices. Also the Air Force should handle termination notices by adjusting the purchase request so the inventory position equals the requirements objective. This is a change from their current policy of adjusting the purchase request so the inventory position equals the termination level. (Author)

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Document Details

Document Type
Technical Report
Publication Date
Jul 01, 1980
Accession Number
ADA089653

Entities

People

  • Carol Hawks

Tags

Communities of Interest

  • Weapons Technologies

DTIC Thesaurus Topics

  • Air Force
  • Air Force Facilities
  • Cancellation
  • Contract Administration
  • Contracts
  • Cost Effectiveness
  • Costs
  • Inventory
  • Oklahoma
  • Resource Management
  • Safety
  • Safety Factor
  • Simulations
  • Statistics
  • Supply Chain Management
  • Weapon Systems

Readers

  • Aerospace logistics and air mobility.
  • Government and Public Administration Law.
  • Mathematical Modeling and Probability Theory.