An enterprise-wide model for redistributing excess material
McNulty, Kevin S.
Dillion, Aaron J.
Mourning, Matt H.
Doerr, Kenneth H.
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For the last 10 years, the Navy has been consolidating its major business functions into an Enterprise Resource Planning (ERP) system to increase efficiency, reduce costs, and improve accountability. Much of this effort has focused on integrating information and standardizing business processes at the corporate level. Individual fleet units, such as ships and aircraft squadrons, have been largely left out. The decentralized management of fleet inventory often produces suboptimal results when viewed from the enterprise level. One of the most serious problems in the current model is investment in excess inventory. For example, in April 2012 nearly $171 million in system-wide inventory deficiencies could have been filled with excess material onboard fleet units. We approach this problem from both a short-term and a long-term perspective. In the short term, we analyze fleet inventory levels and show how a mixed-integer program could be used to efficiently redistribute this material while minimizing cost. For the long-term, we describe an enterprise-wide redistribution model, based on corporate lateral transshipment models, that uses ERP to automatically source requisitions to fleet units. We present three different logic trees to describe how such a model might be incorporated into ERPs sourcing function.
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