The Life-of-Type Inventory Decision for Diminishing Manufacturing Sources Items: A Sensitivity Study.
Abstract
The Life-of-Type (LOT) Buy is required to resolve up to 50 percent of Diminishing Manufacturing Sources (DMS) electronic item problems, but an arbitrary buy method with no theoretical basis is currently used by the Defense Electronic Supply Center (DESC). A 1,772 DMS item historical data base was provided by DESC. The cost effectiveness of this method was projected; the method is estimated to over or under buy in 90 percent of cases. The assumptions of the current method were investigated. Simple linear regression results could not refute the assumption of constant mean demand over time. Situational variables were tested for predictive relationships for demand slope; no significant relationships were concluded. A single buy multi-period total cost optimization program was used to perform controlled sensitivity analysis of the LOT buy quantity to cost and demand mean, variance, and slope and sensitive within ranges of interest rate, holding costs, and a hypothetical stockout penalty function. A more systematic buy approach which recognizes individual item characteristics and explicit and implicit situational costs was recommended. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1982
- Accession Number
- ADA122893
Entities
People
- Christine E. Fisher
- Walter F. Sheehan
Organizations
- Air Force Institute of Technology