Title page for ETD etd-21398-20285

Type of Document Master's Thesis
Author Taylor, Hugh Don
Author's Email Address taylordon@calibresys.com
URN etd-21398-20285
Title Economic Tradeoffs of Substituting Transportation for Inventory in the Department of Defense: A Case Study of Pipeline Reduction
Degree Master of Arts
Department Economics
Advisory Committee
Advisor Name Title
Waud, Roger N. Committee Chair
Lutton, Thomas J. Committee Member
Reid, Brian K. Committee Member
Wentzler, Nancy A. Committee Member
  • Transportation
  • Inventory
  • Tradeoff
  • Simulation
Date of Defense 1997-02-06
Availability unrestricted
This thesis identifies the potential net economic gains from substituting less costly transit for relatively costly parts inventory through pipeline reduction. The analysis considers long run steady state economic implications of adjusting the current mix of inventory investments and transportation expenses.

The scope of the analysis is focused on a case study of Department of Defense (DoD) parts inventories within the US. The inventory scope is limited to high cost low priority, non-mission critical, replenishment parts (engines, electronics, assemblies and components, etc.). The study uses baseline data collected over 9 months from over 200 inventory sites on thousands of parts.

Pipeline reductions are achieved by replacing the current 6 day transit time with a conservative 3 day commercial carrier (e.g., UPS, DHL, Emory Air, etc.). Warehouses in the case study automatically lower inventory levels in response to lowered transit times to prevent inventory buildup. These lower inventory levels will generate reductions in inventory investment and associated holding costs. The reductions in these inventory costs are compared to the increases in transportation expenses to generate benefit to cost ratios.

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