Administrative and Holding Costs Resulting from Processing Reports of Discrepancy
Abstract
The Packard Commission has recommended that the government conduct its purchasing operations in a fashion similar to that of the private sector by emphasizing quality and schedule in addition to price. The Defense Logistics Agency's (DLA) Directorate of Contracting is examining the possibility of quantifying the costs associated with poor contractor performance and incorporating these costs into the bid evaluation process. In support of this effort, the DLA Operations Research and Economic Analysis Office (DLA-LO) has been tasked with evaluating the cost associated with discrepant supplies that are attributable to contractor fault. This study examines two elements of the cost of discrepant items and the resulting Report of Discrepancy (ROD) processing: specifically, the administrative cost and the holding cost. The administrative cost arises from actions normally performed at various supply and staff levels (internal and external to DLA) when a discrepant item or shipment is discovered and an ROD is initiated, processed, investigated and resolved. The holding cost results from the storage and handling of discrepant items and from the lost opportunity of investment for money tied-up in these supplies. Keywords: Cost estimates, Logistics management.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 01, 1990
- Accession Number
- ADA219004
Entities
People
- John Bray
Organizations
- Defense Logistics Agency