A Total Cost Analysis of Using Surface Transportation and Additional Inventory versus Air Transportation to Support C-130-7 Engine Demand in Europe

摘要

DOD cost estimates four transportation are expected to increase considerably faster than the estimated rate of inflation. Because of the expected transportation cost increases, the need for more economical means of moving cargo overseas is of increasing importance. This research explores the possibility of increasing inventory assets and using surface transportation modes to move cargo in bulk as opposed to moving single items by air. A total cost model was developed to be used as a guide in determining the cost trade-off in comparing the surface mode with increased inventory versus air transportation. This model was then applied to the movement of C-130-7 aircraft engines from Kelly AFB, Texas to Rhein Main AB, Germany. The analysis revealed that under expected forecasts, more than half the cost of moving the engines by air could be saved by changing to surface modes and adding pipeline inventory which provides additional assets that could prove to be very critical during wartime. Thus, the authors concluded that DOD could realize considerable savings in transportation costs by building an inventory and using more surface transportation for overseas cargo movement.