Implementation of the New Wholesale EOQ Safety Level Formula

摘要

In an earlier study, Wholesale EOQ Safety Level, we analyzed the Air Force's System Support Division (SSD) consumable item wholesale safety level algorithm. As a result of our analysis, we recommended changes to the safety level that would increase unit fill rates by four percent at the same requirements cost as today. While working implementation issues, we 'fine-tuned' the model to better support the high cost, high essentiality items and still achieve the four percent gain in unit fill rate. The high cost, high essentiality items can significantly impact mission support and therefore warrant safety level support. The safety level is designed to minimize back orders based on variable costs. Because the unit cost of consumable items varies from one cent to over a million dollars, the model increases the safety levels for inexpensive items, since they provide a greater reduction in back orders per dollar spent. PROBLEM STATEMENT: Develop a method to increase the safety level for the more expensive, high essentiality items, without significantly decreasing the gain in the unit fill rate. (kr)