A Study of Defense Logistics Agency Inventory Classifications: Application of Inventory Control Methods to Reduce Total Variable Cost and Stockage Levels.

Abstract : This thesis analyzes the financial impact of applying a single inventory requirements model to three separate classes of inventory at the Defense Logistics Agency's (DLA) Defense Supply Center-Columbus (DSCC) commodity management facility. DLA' 5 blanket application of its variation of the Economic Order Quantity (EOQ) requirements model may not be appropriate for all levels of demand, possibly suboptimizing DLA's desire to minimize inventory costs while still providing an appropriate level of customer service. Simulation analyses of the DLA EOQ requirements model, the Silver-Meal heuristic, and Periodic Order Quantity models were conducted to examine which dynamic lot-sizing model is more effective in minimizing inventory costs and levels for different levels of item demand. The Periodic Order Quantity model provided lower inventory levels and total variable costs than the DLA EOQ and the Silver-Meal models for the medium demand category. The DLA EOQ requirements model was found to provide lower inventory levels and total variable costs than either the POQ or the Silver-Meal models in the low and high demand categories.