Accession Number : ADB107127

Title :   An Evaluation of the Implied Shortage Factor and Its Effect on the Air Force Logistics Command's Economic Order Quantity (EOQ) Variable Safety Level.

Descriptive Note : Master's thesis,

Corporate Author : AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF SYSTEMS AND LOGISTICS

Personal Author(s) : Smith,Lee J.

Report Date : SEP 1986

Pagination or Media Count : 145

Abstract : Adhering to policy guidelines established in DOD Instruction 4140.39, Headquarters Air Force Logistics Command (HQ AFLC) employs the Wilson Economic Order Quantity (EOQ) model and a derivation of the Presutti and Trepp Model IV to establish inventory variable safety levels. The safety level (SL) model minimizes the sum of total variable costs subject to a constraint on time-weighted, essentiality-weighted requisitions short (backorders). The implied shortage factor, lambda is an arbitrary value that has a major effect on the SL formula and inventory levels at each wholesale supply depot, the Air Logistics Center. The objective of this thesis was to determine the effectiveness of the process by which lambda has been previously determined at HQ AFLC. Proposed changes to that methodology were to ensure consistency in calculations and to maintain adequate inventory safety levels subject to a budgetary constraint. Past inventory level cost data was analyzed to determine if inventory stock investments were near their spending goals. Then, computer simulations using a stratified sample of each ALC's past eight quarters of inventory historical data, a wide range of lambda values, and current management cost parameters were conducted.

Descriptors :   *INVENTORY CONTROL, *SHORTAGES, MATERIEL, SUPPLY DEPOTS, THESES, MATHEMATICAL MODELS, AIR FORCE LOGISTICS COMMAND, ECONOMICS, QUANTITY, INVENTORY, INVESTMENTS, COSTS, MANAGEMENT, PARAMETERS, SAFETY, COMPUTERIZED SIMULATION, POLICIES, RANGE(EXTREMES)

Distribution Statement : APPROVED FOR PUBLIC RELEASE