Army Inventory: Need to Improve Process for Establishing Economic Retention Requirements
NSIAD-92-84
Published: Feb 27, 1992. Publicly Released: Feb 27, 1992.
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Highlights
Pursuant to a congressional request, GAO reviewed how the Army determines its economic retention requirements for inventory items, focusing on: (1) the methodology of the computer model the Army uses for calculating the economic retention requirements; (2) how the Army uses the computer model and the quality of the model's cost factors and rates inputs; and (3) the impact of model or data inaccuracies or inadequacies on supply operations.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Army | The Secretary of the Army should direct the Commander, Army Materiel Command (AMC), to require that the economic retention program the Army is now developing be validated as methodologically sound. |
Closed – Implemented
The agency agreed with the report recommendations and advised that a new economic retention model was released to the ICP in August 1992. The logic flaws and programming errors that were in the old model have been eliminated.
|
| Department of the Army | The Secretary of the Army should direct the Commander, AMC, to require that the national inventory control points use the newly developed model for determining all economic retention inventory requirements. |
Closed – Implemented
The agency agreed with the report recommendations and advised that the new economic retention model will be used for making all economic retention decisions.
|
| Department of the Army | The Secretary of the Army should direct the Commander, AMC, to require that, when an item does not qualify for economic retention but there is a valid need to retain it, its retention be justified on another basis. |
Closed – Not Implemented
The agency agreed with the report recommendations and advised that AR 710-1 provided that such items would be categorized as contingency retention or potential excess.
|
| Department of the Army | The Secretary of the Army should direct the Commander, AMC, to issue guidance to the national inventory control points that clearly defines the data to be considered and the methodology for calculating the cost factors and rates to be used in the model. |
Closed – Implemented
The agency agreed with the report recommendation and advised that the rates and factors have been updated as part of the new economic retention model.
|
| Department of the Army | The Secretary of the Army should direct the Commander, AMC, to require that the cost factors and rates related to obsolescence, inventory losses, and disposal revenue be uniformly calculated by the inventory control points. |
Closed – Implemented
The agency agreed with the report recommendations and advised that the rates and factors have been standardized as part of the new model. Therefore, all ICP will uniformly compute retention levels.
|
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Topics
Army suppliesComputer modelingData integrityDefense contingency planningDefense economic analysisInventory control systemsLogisticsMilitary inventoriesStatistical methodsMilitary forces