Wholesale EOQ (Economic Order Quantity) Safety Level
Abstract
Since 1981, the Air Force's System Support Division (SSD) consumable item fill rates have decreased from 87 percent to its current level of 76 percent. The current Economic Order Quantity Requirements System (DO62) computes requirements to reach an implied fill rate of 85 percent, which we currently fall well below. One of the causes of the declining performance is the current safety level computation. To analyze the effectiveness of the current safety level, we used the Air Force Logistic Management Center developed multi-echelon simulation model. This model simulates transactions between bases and depot and from the depot to vendors. We ran the model for a 50-year simulation period using actual data from three different Air Logistics Centers. As a result of our analysis, we recommend improvements to the safety level that increase fill rate performance by almost 4 percent at the same requirements cost as today. In addition, we can develop trade-off curves which relate dollars to fill rate performance, which will help budget managers, provide estimates for future funding requirements, provide more mission oriented performance targets and more accurately stratify existing inventory.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 01, 1988
- Accession Number
- ADA199167
Entities
People
- Douglas J. Blazer
- Mark Gaetano