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NSIAD-85-160 1 (1985-09-30)

handle is hein.gao/gaobabnud0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION September 30, 1985 B-220514 General Richard H. Thompson Commander, U.S. Army Materiel Command 5001 Eisenhower Avenue 128193 Alexandria, Virginia 22333 Dear General Thompson: Subject: The Army's Safety Level Requirements for Secondary Items May Be Inaccurate and Excessive (GAO/NSIAD-85-160) We have concluded a limited survey of the Army's safety level requirements in the wholesale supply system. The purpose of safety level stocks is to have a quantity of materiel on hand to meet Army needs should there be a minor interruption in the manufacturer's ability to provide items or should the Army's demand for items increase for some unpredictable reason. This work was initiated because we had observed instances where safety level requirements, as stated in number of months, exceeded the items' procurement *ead time requirements.1 In these circumstances, we believe, the safety level requirements may be overstated and may not meet the DOD objective of minimum stocks needed to efficiently meet the Army's supply support mission. Our survey of the Army Materiel Command's (AMC) 6 major subordinate commands showed that safety level requirements for 48,399 secondary items (spares and repair parts) exceeded procurement lead time requirements by a number of items valued at about $76 million. The Department of Defense (DOD) requires that safety levels be at least equal to the procurement lead time requirements. We have observed that the economic order quantity/variable safety level (EOQ/VSL) formula used to compute requirements for stock produces auantities that are erratic, may be excessive, and do not materially improve supply support. Though our work was limited in scope, we believe there may be potential for reducing some safety level requirements. Army 1The quantity of materiel needed to meet requirements during the time elapsing between the initiation of procurement action and receipt of the materiel purchased. (393046)