AFMC Management Sciences Division logistics analysis - Current Logistics Research

Air Force Journal of Logistics, Summer, 2002 by Richard Moore

Questions are never indiscreet. Answers sometimes are.

-- Oscar Wilde

Air Force logisticians are constantly faced with difficult decisions. "Should I buy part X or part Y?" "Which requisition should I satisfy first?" "Which part should I repair first?" Not only are these questions themselves difficult, but the tremendous impact the answers have on the readiness of the Air Force intensifies the decision. The incredible number of these decisions being made every day can be overwhelming, but through the prudent application of professional analysis, logisticians are able to make the best decisions supporting the warfighter.

Providing professional analysis support for these types of decisions is the primary business of the Management Sciences Division of the Air Force Materiel Command (AFMC). The majority of the analysts have advanced degrees in technical areas such as operations research, mathematics, engineering, and management sciences. Although the division is a part of the Directorate of Plans and Programs, it often performs studies and analyses for clients outside the directorate, particularly in the AFMC Logistics Directorate

In 2001, Management Sciences devoted a major portion of its efforts toward implementing and improving methods for managing materiel spares and further expanded its scope to other AFMC mission areas (product support, depot maintenance) where it could provide decision-support products and analytic tools could be applied. Generally, the tools and products helped the mission areas determine requirements, allocate resources, execute support actions, and assess impact. The following summary highlights three of the most significant spares management studies and provides an overview of other contributions.

Customer-Oriented Leveling Technique

The depots have fixed funding each year for buying Defense Logistics Agency (DLA)-managed spare parts in support of depot-maintenance operations. The funding varies from $600M to $800M a year, which can be spent on roughly 300,000 parts across the three depots. How should this money be spent to best support the depot maintainers and, ultimately, the warfighter?

Each of the air logistics centers (ALC) had developed its own answers to this question, but none adequately accounted for various factors that affect supply support:

* Available spares budget

* Expected responsiveness from DLA for each part

* Cost of each part

* Variability in demand for each part

Even more important, none of the previous policies explicitly targeted customer support when setting spares levels.

Management and Sciences worked with the Supply Division and the depots to develop a standard depot-stockage policy for AFMC. The policy became embedded within a Management Sciences-developed, database-driven tool--the Customer-Oriented Leveling Technique (COLT). A COLT was developed to determine optimally which DLA-managed parts the depots should buy to achieve the lowest possible, expected customer wait time for a given amount of General Support Division funding. With COLT customer wait time, reductions of up to 80 percent may be possible for the same level of funding.

COLT was implemented across all three depots by November 2001. The actual customer wait time across all depots was baselined on 1 October 2001 at 6.94 days and, as of 1 July 2000, had fallen to 3.88 days--a 44-percent reduction. As a result of these dramatic successes at the depots, efforts have begun to expand COLT to the base level at other major commands (MAJCOM).

Evaluation of Commercial Off-the-Shelf Forecasting Packages

Which spare parts will my customers be requesting in the future? There is no more fundamental question in spares management than this; yet, it is also one of the most difficult. If the answers were known, the savings in inventory costs and improvements in readiness would be tremendous. Because of this, the search for this logistics Holy Grail has led many to suggest that commercial industry must have better forecasting techniques than the Air Force. Management Sciences evaluated the performance of commercial-off-the-shelf (COTS) packages relative to the performance of the forecasting techniques in AFMC's Secondary Items Requirements System (SIRS or D200A), which is used to compute future spares requirements for recoverable items.

The purpose of the study was to determine whether or not a commercial forecasting software package with an expert selection capability could generate more accurate forecasts than the four techniques currently being used in D200A. A forecasting software package with expert selection capability automatically determines what technique, from a set of different forecasting techniques, to use when forecasting future values of a time series. The study examined six different COTS forecasting packages. Each package was used to generate forecasts for stock numbers from several samples of data--including random samples, a sample of items with high mission-incapable hours, a sample of items with high demand-to-program ratios, and a sample of low-demand items. The forecasting accuracy of each commercial package was compared to the forecasting accuracy of the 8-quarter moving average technique from D200A. The 8-quarter moving average was selected as the baseline for comparison because it is currently the most frequently u sed forecasting technique in the system.