Improving Industrial Plant Equipment Retention Decisions
Abstract
When a Military Service no longer needs an item of industrial plant equipment, it is offered to the Defense Industrial Plant Equipment Center's (DIPEC's) General Reserve, where it may be kept for mobilization or repaired and reissued for reutilization in current production, in lieu of purchasing a new item. When an item is offered, DIPEC must decide whether to retain it for mobilization/reutilization or dispose of it on the open market. If retention would be for mobilization, this decision is made judgmentally. If retention would be for reutilization, DIPEC uses an economic evaluation system comparing costs and benefits. LMI was tasked to review the procedures for making the retention/disposal decision and to recommend improvements. The study found requirements determinations, both for mobilization and for reutilization, arbitrary and lacking in credibility. It concluded that DIPEC's present economic evaluation system, used in the case of reutilization requirements, is unrealistically biased toward retention. The report recommends careful redetermination of mobilization and reutilization requirements. With regard to retention/disposal decisions for satisfying reutilization requirements, it class for replacing DIPEC's present decision-making system by one based on an independent appraiser's comparison between cost to repair and the fair market value of the repaired item. The report also recommends charging users the costs of preparing items for reissue, so that users' choices between new and old items will better reflect the true costs to DoD.
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 1983
- Accession Number
- ADA136544
Entities
People
- J. R. Dever
- M. G. Myers
Organizations
- LMI