Inventory management of repairables in the US Marine Corps - a virtual warehouse concept

Abstract

The 1998 Department of Defense (DoD) Logistics Strategic Plan directed a sweeping program to reform the "business" of the DoD. A key component of the plan is that inventories be established at the lowest possible levels and be positioned to permit rapid delivery to the customer. In response, the Marine Corps has established a "virtual float" concept that seeks to reduce inventory levels for secondary repairables (SecReps). We show through a simulation model that the Marine Corps should not expect large savings from a virtual float operating with a lateral transfer inventory policy. For the items we selected, additional transportation costs for lateral transfers almost entirely eliminated savings due to reduced inventory. We also address organizational issues involved with a centralized system