Economic Feasibility of DLA (Defense Logistics Agency) Materiel Maintenance Mission
Abstract
The Defense Logistics Agency (DLA) Directorate of Supply Operations requested from DLA's Operations Research and Economic Analysis Office (DLA-LO), a study to reevaluate and update a series of formulas presented in DLAM 4151.1, DLA Mission Materiel maintenance Management Manual, for use in computing the economical basis for repair of unserviceable stock. It was determined that prior to this reevaluation, it would be appropriate to determine the economic feasibility (profitability) of DLA's materiel maintenance mission. This study examines the economic feasibility of stock maintenance operations. DLA's maintenance operations appear to be economically sound. The yearly net economic value generated, compared with the value of the assets employed, represents a rate of return greater than 10%. We estimate that the total economic benefits generated during Fiscal Year 1987 were $32 million, the total economic costs were $26 million and the value of the assets employed was $26 million. Because of the questionable validity of some of the data used for this analysis, we recommend that, before any decision is made which would make major changes to the size or scope of the operations, and additional analysis should be made using more reliable historical data. Our primary recommendation is to modify the Job Order Tracking and Management System used by the stock maintenance operations to allow the generation of this valid historical cost data base.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 1988
- Accession Number
- ADA216162
Entities
People
- Thomas L. Brooks
Organizations
- Defense Logistics Agency