End user inventory consolidation: is it cost effective?

Abstract

The Naval Supply Systems Command (NAVSUP) and the Naval Air Systems Command (NAVAIR) decided to sponsor a Naval Aviation Depot (NADEP) and Fleet Industrial Supply Center (FISC) partnership to determine what material support functions, currently performed by NADEP, could be consolidated at the FISC level. A total cost analysis is conducted to evaluate the difference between pre and post-consolidation repair parts inventories. Two alternative inventory strategies are considered; end users maintaining separate inventories (for example NADEP or shipyards), and end users' inventories being consolidated at the FISC level. Principal elements include inventory holding, set up, and stock-out costs.