Wartime Spares - logistics support and planning for war

Jon A. Larvick

Operation Allied Force, sometimes called the Air War over Serbia, presented the Air Force with an operational experience that is perhaps more indicative of future air expeditionary force (AEF) operations than has been experienced in the past. This is important in that it provides a new framework for analyzing the ways in which we plan for war.

Of great interest in today's Air Force is the ability to provide logistics support to match carefully tailored force employment concepts. Rapid movement of supplies in the pipeline between factory and flight line provides a reach-back sustainment capability and allows for a much needed, smaller logistical footprint in theater. A focused logistics system provides the flexibility and responsiveness required of the Agile Combat Support competency. [1]

Inventory within a Logistics System

I don't know what the hell this "logistics" is that Marshall is always talking about, but I want some of it.

-Fleet Admiral E. J. King, 1942

Today, as in Fleet Admiral King's day, logistics is a concept whose need is evident, yet the concept of logistics is so broad that it is not easily definable. It is often referred to as supply chain management, integrated resource management, or other related concepts. At the same time, logistics is often referred to by its various functions, such as supply, transportation, or maintenance. However, it has been suggested the best way to understand logistics is to get back to basics. [2]

In getting back to basics, we know, from joint doctrine, that logistics is combat power's foundation. [3] And from the Air Force perspective, logistics falls within the core competency of Agile Combat Support, which requires highly responsive support as combat forces are deployed forward. [4]

As we continue to break this down to basics, responsiveness is the keystone principle of logistics. [5] One method for providing responsive force support is through the levels of inventory within a logistics system.

Inventory-Back to Basics

All businesses and institutions require materials and supplies that are either sold or used to provide inputs or supplies to the production process. These materials and supplies are called inventory. [6] Inventory serves a number of functions, such as balancing supply and demand or protecting against the uncertainty of demand. Therefore, a firm holds inventory to provide a certain level of customer service. However, this customer service has an associated cost. Hence, it is easy to see the importance of properly managing inventory.

Functions of Inventory

Inventory serves the following purposes within a firm:

* Enables the firm to achieve economies of scale

* Balances supply and demand

* Enables specialization in manufacturing

* Provides protection from uncertainties in demand and order cycle

* Acts as a buffer between critical interfaces within the distribution channel [7]

Economies of Scale. Inventory makes it possible to create economies of scale within the functions of purchasing, transportation, and manufacturing. For example, large volume purchases will often bring smaller unit costs. Also, large shipments will bring transportation economies, especially when they result in full truckload or railcar shipments. Finally, inventory creates economies of scale within manufacturing by allowing the manufacturer to schedule longer production runs with few production line changes. [8]

Balancing Supply and Demand. Different conditions exist that make it necessary to manufacture finished products in excess of current demand levels and place them into inventory. For example, manufacturers of seasonal items such as snow shovels may need to produce them in advance of the need and place them into inventory because their production rate cannot respond quickly to the demands of winter storms. Holding inventory will allow the manufacturer to avoid the costs of developing production capacity to match peak demand periods, avoid wide fluctuations between idle and production time, and provide a more stable workload for its work force. [9]

Specialization. Holding inventory in large mixing or distribution warehouses, as done by chain stores such as WalMart and Target, allows the manufacturers to specialize in products. This specialization results in better manufacturing processes, longer production runs, transportation efficiencies, and other benefits. [10]

Protection from Uncertainties. The demand for a product varies greatly over time. This can be caused by seasonal influences such as holidays or simply by unanticipated demand. Holding inventory provides protection from these uncertainties by reducing the likelihood of a stockout due to unanticipated demands. [11] This inventory is often called safety stock.

Buffer. Buffer inventories are held between critical nodes of a distribution channel. These critical nodes include production, distribution, intermediary suppliers, the final consumer, and others. Since these critical nodes can be geographically separated, this buffer inventory provides time and place utility. [12]

Customer Service and Costs

Although inventory is held for various reasons, the main purpose for holding inventory is to maximize customer service. Customer service, in this sense, means having items available when the customer needs or wants them. In the commercial sector, customer service is measured in various ways: percentage of orders shipped on schedule, number of back orders, percentage of line items shipped on schedule, and order days out of stock. [13]

While customer service is an important criterion to a firm, holding large amounts of inventory to prevent a stockout is not always possible because of the costs involved; for example, item costs, carrying costs, ordering costs, stockout costs, and capacity-related costs. [14]

Item Cost. Item cost is simply the purchase price of the item, which includes transportation, custom duties, and insurance. For items that are manufactured in house, item costs include all associated direct costs, such as direct material, direct labor, and factory overhead.

Carrying Cost. Carrying costs include capital, storage, and risk, which are directly correlated to the amount of inventory held. For example, capital cost is the money invested in inventory that cannot be invested elsewhere. Storage costs include cost of the storage location and the manpower required to store inventory. Finally, risk costs include those incurred due to pilferage, obsolescence, product deterioration, and damage caused during handling. [16]

Ordering Cost. As opposed to carrying costs, which correlate directly with the quantity of inventory, ordering costs are not affected by quantity. Instead, they depend on the number of orders placed in a year and include basic items such as the cost to prepare followup and receive, account for, and authorize payment for the order. Ordering costs can also include manufacturing costs as a result of setup and teardown to run numerous orders and may include the cost of lost capacity as a result of numerous setups and teardowns. Placing fewer orders for larger quantities can reduce ordering costs; however, this will increase inventory-carrying costs. [17]

Stockout Cost. When demand for an item exceeds its supply, the resulting stockout condition carries a number of costs with it. These include the cost of back orders, lost sales, and possibly lost customers. [18]

Capacity-related Cost. When output levels in a manufacturing firm must be changed, capacity-associated costs result. Examples include the costs of overtime, hiring, training, extra shifts, and layoffs. These costs can be minimized through the use of level production runs; however, level production runs will build inventory in slack periods and may result in stockouts during peak periods.

Inventory Management

When you consider these five cost categories, it is obvious that holding large amounts of inventory to ensure 100 percent customer service can be an expensive proposition. Therefore, there is a relationship between customer service and costs. This relationship drives inventory managers to ask a number of questions. For example, are you willing to accept back orders and risk lower customer service in order to save the costs of holding inventory? Or do you expend large amounts of capital because a stockout is unacceptable? These questions highlight the tradeoff between customer service and inventory costs. However, since many firms may carry a large number of items in stock, inventory managers must ask one additional question. How much effort are you willing to expend to manage your inventory in light of the costs? These questions form the basis of inventory management.

ABC Inventory Control. When forced to decide the level of effort to expend in managing inventory, managers will often divide inventory into three classes based on costs or importance. Then, the inventory management effort and methods will be matched with the different classes. For example, the most important or costly items (usually the top 5 percent of the items [class A]) will be managed more precisely than any of the less costly items. The moderate-cost items (usually the next 15 percent [class B]) deserve some type of special management, while the inexpensive items (the other 80 percent [class C]) do not require any special management effort. [19]

The relationship between customer service and costs is the main concern of inventory management. The ABC analysis shows how inventory managers concentrate management efforts on those items where their efforts will have the most benefit.

The Air Force Reparable-Item Pipeline

Within the Air Force, the management of high-cost inventory items (those that would be considered class A items under ABC inventory control) is handled in a reparable-item pipeline.

A reparable-item inventory system is a system used for controlling items that are generally very expensive and have long acquisition lead times. Hence, it is more economical to design these items so they are repaired after they fail, rather than treating them as consumable items, which are disposed of after use. A standard, military reparable-item inventory system consists of a repair facility (depot) dedicated to support several locations (bases) dispersed over an extensive geographical region where equipment (aircraft) is assigned. Over time, equipment malfunctions occur due to the failure of a specific item internal to the equipment. A corresponding serviceable item is then obtained from an inventory location and installed on the malfunctioning equipment, thereby restoring it to full operational capability. The failed item is tracked as it is shipped to the repair facility, scheduled for repair, and subsequently shipped in a serviceable condition back to an inventory location. [20]

Functions of Inventory

By looking at the reparable-item pipeline depicted in Figure 1, in comparison with the functions of inventory discussed above, it is easy to see how inventory in the pipeline can prove beneficial to the Air Force. There are many critical, geographically separated nodes within the system. Therefore, buffer inventories can provide time and place utility. Also, since demand for an item is based on the item's failure, holding inventory can protect against the uncertainty inherent in such a system. Inventory can also allow specialization, only this time for the repair facility in place of the manufacturing facility, a unique aspect of the reparable-item pipeline due to its repair vice replace criteria.

Customer Service and Costs

Customer service is defined in terms of having items available when the customer needs them. This definition is true for the Air Force also, although it is measured differently than in the commercial sector. It is measured in terms such as the NMCS rate (percent of aircraft that are not mission capable due to supply of an item), FMC rate (percent of fully mission capable aircraft), fill rate (percent of authorized readiness spares package on hand), issue and stockage effectiveness (percent of time supply had what the customer ordered and percent of time supply had what it decided to stock), and aircraft availability (number of aircraft available to fly on a certain day).

Given the kinds of high-cost items in the Air Force reparable-item pipeline system, it is cost-prohibitive to stock inventory to avoid all possibilities of a stockout. Again, the tradeoff between cost and customer service comes into play. For the reparable-item pipeline, quantity decisions to optimize costs and customer service are made using an Air Force Materiel Command system, the Recoverable Consumption Item Requirements System (D041).

D041. D041 is a management information system used by the Air Force to compute worldwide requirements and inventory levels for reparable items. It does this by breaking the pipeline (Figure 1) into 11 segments and then computing or assigning quantities for each segment. These segments are:

* Organizational and intermediate maintenance (OIM) operating requirement

* Total OIM base stock-level requirement

* OIM depot stock-level requirement

* Management of items subject to repair non-job-routed (NJR) requirement

* Programmed depot maintenance NJR requirement

* Engine NJR requirement

* Total overhaul condemnations requirement

* Total overhaul stock-level requirement

* Prepositioned requirement

* Restocked requirement

* Additive requirement

When comparing these segments to Figure 1, segments one and two occur within the base-level block, and segments three through eight occur within the depot-level block. Segments 9 through 11 are additional requirements established to support needs such as wartime. [22] All quantities are either computed or assigned within D041 to allow inventory to provide beneficial functions, as described above, and the tradeoff between customer service and costs. These inventory calculations are based on an algorithm designed to provide marginal analysis. In marginal analysis, each item's contribution to the goal of aircraft availability per dollar spent is optimized and results in the best availability/cost solution for each segment of the pipeline. [23] Although not computed within D041, this same marginal analysis is used to compute wartime requirements separately, and these quantities are placed in segments nine and ten of the D041 system. Segment nine, the prepositioned requirement, includes items allocated as readiness spares packages (RSP). These packages are designed to deploy forward along with the fighting unit to a contingency, conflict, or war. These packages are the focus of this article.

Readiness Spares Packages

Readiness spares packages can be separated into two types: mobility readiness for units that deploy and in-place readiness for units that fight in place. In either case, management of these spares is governed by Air Force Manual 23-110, USAF Supply Manual, Chapter 14, which states:

The major objective of the RSP program is to support national strategy in consonance with the guidance issued by the Office of the Secretary of Defense. Specifically, the Air Force objective is to authorize, acquire on time, preposition, prestock, and maintain in a serviceable condition ready for use all RSP needed to support the wartime activities specified in the War and Mobilization Plan (WMP). [24]

RSPs are considered supplies of vital importance whose requirements are determined based on the maintenance capabilities available at the wartime location. Again, as with all inventory decisions discussed so far, items and quantities within RSPs will be the minimum necessary to support the WMP-tasked mission--the customer service and cost tradeoff. [25] These items and quantities will be provisioned according to the quantities computed by the Aircraft Sustainability Model (ASM). [26]

The Aircraft Sustainability Model

Air Force inventory managers, in their wartime planning role, must calculate RSP items and quantities to support weapon-system readiness. To do so, they must take into account a wide range of operational situations along with the characteristics of each weapon system component. Operational situations are characterized by the weapon system's flying-hour program. Weapon system component characteristics include projected failure rates, repair times, and procurement costs. The Aircraft Sustainability Model, developed for the Air Force by the Logistics Management Institute (LMI), combines these operational situations and component characteristics into a mathematical statistical model for use by inventory managers. The ASM computes optimal spares mixes to meet the ultimate goal of the logistics system: available aircraft. [27]

Available aircraft is considered the ultimate goal of the logistics system because internal supply system performance measures such as fill rate have weaknesses. [28] One common example in the supply community is in reference to an A-10 RSP fill rate. If this RSP contains 99 percent of its authorized quantity of items (fill rate), it appears to be a healthy situation. However, if the 1 percent of items not available happens to be a spare needed to repair the A-10's gun (its primary weapon), a 99 percent fill rate does not provide a mission-available aircraft. Also, fill rate does not capture information about the complexity of the aircraft being supported. The LMI report describes this best:

All else being equal, more complex aircraft require a higher component fill rate to reach a given availability than do simpler aircraft... availability is defined as a product of probabilities--the probability that the aircraft is not missing its first component, times the probability that the aircraft is not missing its second component, and so on. An aircraft with more components has more factors in the product, and since each probability is less than 1.0, the product will tend to be smaller. Thus, using a fill rate criterion... leads to a bias in favor of the less complex aircraft types. [29]

The LMI report concludes, "In the difficult cost-effectiveness choices that military logistics planners must make, the difference between fill rate and aircraft availability is critical." [30]

To find the aircraft availability solution, the ASM computes an optimal spares mix by combining two systems, the Marginal Analysis System (MAS) and the Cross-Linker. The MAS, driven by the operational situation (sortie rates and durations), is a multi-echelon, multi-indenture model that optimizes spares support for a single day of a scenario. Multiple runs of the MAS are used to analyze multiple days of a scenario. These multiple runs are combined by the Cross-Linker to optimize spares support for the entire duration of the scenario. [31]

To briefly recap, inventory provides function to a firm by enabling the firm to achieve economies of scale, balance supply and demand, specialize in manufacturing, protect against uncertainties in demand, and act as a buffer between critical interfaces within the channel of distribution. Because of these functions, inventory contributes to the level of customer service a firm can provide. Customer service is defined as having items available when the customer needs them. When the firm holds inventory, it often provides customer service but also incurs costs. These costs are categorized as item, carrying, ordering, stockout, and capacity-related costs. Because of customer service and cost tradeoff, inventory managers often use ABC inventory control to divide inventory into management classes. Under this system, the most expensive (Class A) items are managed more precisely than the less costly items.

The output of the model provides an optimal shopping list. This list can show, given a specific funding level, the mix of spares that will provide the highest aircraft availability rate. Or ASM can take a given availability rate, called the direct support objective (DSO), and develop the least-cost spares mix to reach that target. [32]

In the Air Force, Class A-type inventory items are managed within the reparable-item pipeline. Within this pipeline, inventory performs the same functions as described above. These functions, again, lead the Air Force to hold inventory in order to provide customer service. Holding inventory in the Air Force incurs the same costs. The customer service and cost tradeoff for the 11 segments of the reparable-item pipeline is computed by the D041. As part of the pipeline, RSPs are included to support wartime activities specified in the War and Mobilization Plan. Deciding the composition of an RSP, again, is based on the same customer service and cost logic as with the D041. In the case of RSPs, the optimal mix of spares is calculated through a program called the aircraft sustainability model.

KC-135s in Operation Allied Force

Given the nature of the air campaign and the many obstacles tankers had to overcome, their accomplishments were remarkable.

Lieutenant General William J. Begert

Operation Allied Force began on 24 March 1999 and ended 78 days later as the largest combat operation in the history of the North Atlantic Treaty Organization (NATO). Thirty-eight thousand combat sorties succeeded in delivering a punishing air offensive with virtually no loss to NATO forces. Because of the pressures brought to bear, Slobodan Milosevic withdrew his Serbian forces from Kosovo and acquiesced to NATO conditions. [33]

Active and Reserve component air-refueling aircraft (tankers) played a key role in Operation Allied Force. They provided multiple air bridges for aircraft transiting to the theater and refueling support for more than 24,000 combat sorties. [34] Tankers, 112 active and 63 Reserve aircraft, flew more than 5,000 sorties and delivered 250 million pounds of fuel. This operation differed from Desert Storm, as tankers were required to support reinforcement and sustainment efforts continuously until the end of hostilities. General Begert, coordinator of the operation's offensive and defensive air operations said, "Given the nature of the air campaign and the many obstacles tankers had to overcome, their accomplishments were remarkable." [35]

Based on the final results of tanker operations during Allied Force, is it safe to assume that the aircraft spares in the inventory, specifically the spares mix in readiness spares packages, were at optimal levels to support this operation?

How did authorized RSPs support operations during Allied Force? Or, based on the limitation of this project to one weapon system, the KC-135, the question should be, how did authorized RSPs support KC-135 operations during Allied Force?

Fill Rate

As a reminder, fill rate is the percentage of authorized reparables actually on hand for an RSP. Authorized RSP quantities are computed using the Aircraft Supportability Model to provide an optimal mix of spares to support the War and Mobilization Plan for 30 days and provide a sustained DSO of 83 percent. The DSO is the number of aircraft desired and available for the operation.

During Operation Allied Force, 17 of the total 40 RSPs for KC-135s were deployed. At the beginning of the operation, deployed RSPs had a fill rate of 68 percent. By the end of the operation, those fill rates had improved to 77 percent (Figure 2). [36]

Stockage/Issue Effectiveness

Stockage effectiveness is the percentage of total spares authorized to be held in inventory that are available upon customer request. While deployed, the RSP stockage effectiveness for reparable items was 98.4 percent.

Issue effectiveness is the percentage of customer requests that were filled by items in the inventory. The significant difference between stockage and issue effectiveness is that stockage effectiveness uses authorized inventory levels in its ratio. Issue effectiveness is based on filling any request, not just requests for items authorized in the inventory. Therefore, issue effectiveness will usually be lower but is more representative of the customer's view of support. For deployed operations, the issue effectiveness for reparable items was 90.6 percent. [37]

Aircraft Availability

Available aircraft is considered the ultimate goal of the logistics system. During Allied Force, the aerial refueling fleet was forced to endure extended sortie durations because tankers were based at locations extending from Budapest, Hungary, to Mont-de-Marsan, France. Also, operations required high tanker usage rates to support the combat and airlift forces. Even so, the KC-l35 maintained an actual mission-capable rate of 78 percent. [38]

Analysis

Fill Rate. RSPs are often measured by their fill rate. In Allied Force, having to begin operations with RSP fill rates at 68 percent should attract immediate attention. One could quickly jump to the conclusion that inventory reductions are mandated since 68 percent of what was thought to be required produced these types of sortie numbers and positive results. The excellent stockage and issue effectiveness numbers that were achieved in theater could support this conclusion. However, this 68 percent fill rate only produced 78 percent available aircraft--the KG135 RSP's goal is 83 percent. And RSPs were developed to support a two-major-theater-war (MTW) scenario, not another Allied Force. If we were to go to war according to the WMP, a 100-percent fill rate would be required to produce the desired DSO. Anything less has to be offset in maintenance actions (more base-level repairs, higher cannibalization rates, and so forth), a faster logistics pipeline, or fewer numbers of available aircraft.

Depot Response. One area that may be able to absorb the pressure of a low fill rate is the depots. By surging output and expediting repairs, the depots can offset a lower than desired fill rate. In Allied Force, depot response did exactly that, expediting efforts to fill back orders from units involved in Allied Force. These back orders were identified with a special project code that identified them with Allied Force and prioritized them above normal peacetime back orders. Figure 3 shows the reduction in back orders during this period. [39] Depot response not only reduced back orders but also improved deployed-RSP fill rates from 68 to 77 percent by the end of the operation. The risk in prioritizing Allied Force back orders above others is jeopardizing the readiness of other units. However, in this case, the depots not only repaired Allied Force priorities but also surged output across the board (Figure 4). [40]

Aircraft Availability. RSPs for the KC-135 are designed to provide 83 percent aircraft availability based on inputs to the Aircraft Sustainability Model. For Allied Force, RSPs, along with the rest of the logistics pipeline, fell short of the goal and provided only 78 percent mission-capable aircraft.

Operation Allied Force, from the tanker perspective, can be considered a remarkable success. However, analysis of inventory, customer service criteria show that operations did not occur exactly as planned. Fill rates were lower than desired at the beginning of the operation. In spite of that, stockage and issue-effectiveness numbers remained incredibly high. Low fill rates, combined with a flying schedule more demanding than that planned for an MTW, would not be expected to have stockage and issue-effectiveness numbers as high as those achieved. One possible explanation was that the reparable-item pipeline supplied parts at an increased rate. Depot response played a significant role in offsetting initial deficiencies in the fill rate. In addition, the depot continued to supply spares and reduce back orders to all customers. In the end, spares flowing through the reparable-item pipeline failed to meet the expected 83 percent aircraft availability rate, but the final 77 percent rate did provide enough aircraft to bring overall success.

This information describes an operation that may be indicative of the way future operations will occur. If so, an analysis of Operation Allied Force can help prepare aerospace expeditionary forces and their inventory managers in the future.

Aerospace Expeditionary Force

The world is less stable, predictable, and harmonious than it was during the Cold War, with a whole range of new conflicts, rivalries, and challenges.

Richard P. Hallion, Air Force Historian

Threats to American vital interests are much more diffuse today than ever before. The end of the Cold War did not mark the beginning of a new era of peace. Instead, American military units are deployed around the globe to places like the Persian Gulf, Somalia, Bosnia, Rwanda, Haiti, and Kosovo to confront today's largely unpredictable world.

In response to this unpredictable world, the United States Air Force introduced the expeditionary aerospace force (EAF) concept. Under this concept, rapidly deployable airpower packages can be tailored to the situation and launched--ready to operate anywhere in the world in 3 days. [41] An airpower package under the EAF concept will be called an air expeditionary force (AEF).

Today, ten AEFs have been designated from geographically separated units of the active and Reserve forces. These forces are a mixture of assets that includes fighters, bombers, and support aircraft. At all times, two AEFs are on call to respond within 72 hours. This on-call period lasts for 3 months every 15 months. [42]

An unpredictable world drove the need to establish AEFs, but they provide a predictable effect on the reparable item pipeline that is responsible for supporting them. It is important to use recent history, such as Operation Allied Force, to study the system's ability to support these types of deployments. This leads to the next question. How well do current RSP policies and computational assumptions support AEF deployments? Again, this article focuses on one weapon system, the KC-135, and uses customer service and cost tradeoff as its main criteria for analysis.

Scenario

To facilitate a what-if analysis, ASM inputs were based on a scenario similar to what actually occurred during Operation Allied Force. This scenario is split into three segments: sortie duration, sortie rate, and reach-back capability. The subsequent analysis will follow the same three segments and focus on the customer service and cost tradeoff.

In Operation Allied Force, tanker aircraft often operated from airfields on the periphery of the theater, and they were forced to fly missions of longer duration than those planned for an MTW. [43]

The fuel a tanker carries for air-refueling purposes includes fuel the tanker burns in its own engines. Therefore, tankers in Operation Allied Force were not able to loiter as long or provide the same level of support as that normally planned for an MTW. [44] As a result, they were forced to fly more sorties.

Finally, depot operations, along with the rest of the logistics system, provided reach-back capability to overcome low initial RSP fill rates. This reach-back capability provided good results in that fill rates at the end of the operation were better than those at the beginning. [45]

What-If Analysis

An initial baseline run was made with the ASM model, using actual KC-135 package data for a unit with ten aircraft. Some data input into the model was notional, as using actual WMP sortie rates and durations would make the analysis classified. However, even with notional data, the relationships are still clear (Table 1).

In the baseline package, ASM computed an RSP consisting of 219 different reparable types. The total number of units was 691. The cost of these 691 spares was more than $7M, and as the model is supposed to do, this mix of spares achieved an 83 percent aircraft availability rate. The remaining analysis was compared against these baseline figures.

Increased Sortie Duration. In our scenario, operating from bases on the periphery of the theater increases the sortie duration. This was modeled in the ASM by using the baseline package and increasing the sortie duration by 10 and 20 percent (Table 2).

All packages still achieved the 83 percent goal; however, the number of units and overall costs to reach this goal climbed rapidly with the increase in sortie duration.

Increased Sortie Rate. The inputs to the model incorporated the next portion of the scenario. Tankers staged on the periphery must travel farther to meet the aircraft needing fuel; therefore, they have less loiter time and less fuel to dispense on each mission and require more sorties. This was modeled by using the previous model runs with an addition to the sortie rate of 10 and 20 percent (Table 3).

Again, the results were along the same lines. ASM continued to build packages that provided the correct percentage of available aircraft. However, it did this by increasing the number of units authorized. This increase in quantity increased cost.

Assuming that an increase in costs is not acceptable, the model was run with the original baseline package quantities against the various flying data. When the model is run this way, it will provide the best available aircraft percentage possible from that mix and quantity of spares (Table 4).

These results, instead of showing a change in costs, showed the change in customer service. From the baseline of 83 percent, the worst-case scenario lost almost 7 percent of the ultimate goal, available aircraft. Comparing the changes in customer service under the tests in Table 4 to the changes in price as shown in Table 3 highlights an interesting phenomenon. It seems that aircraft availability was less affected by changes in spares quantities than the costs. If aircraft availability exhibits more robustness than in costs, it may be possible, in situations, to give up a smaller percentage of aircraft availability in return for a larger cost savings. The reason behind this robustness is due to the location of the desired availability on the curve shown in Figure 5. The curve demonstrates the law of diminishing returns. This phenomenon shows that a desired increase in aircraft availability requires an increasingly larger cost as it gets closer to 100 percent. Also, in reverse, each dollar reduction in cost h as an increasingly larger negative effect on aircraft availability as you get closer to $0. These results are significant as they demonstrate it is virtually impossible to achieve 100 percent aircraft availability. Also, aircraft availability declines in larger proportion to the number of spares available, moving left on the curve.

Reach-back Capability. The third segment of the scenario calls for increased response from the depot or other portions of the reparable-item pipeline. In the previous models, depot repair did not start until the model run ended. To depict an increased reach-back capability, the worst-case model was changed to allow depot repairs to begin on day one (Table 5).

This model run showed the capability of depot repair to offset an undesirable situation. Depot repair added nearly 3 percent aircraft availability in the first 30 days. This result is quite intuitive--response capability anywhere in the pipeline can provide increased aircraft availability. However, for depots to generate the desired DSO, they would have to improve pipeline response (for example, shorter repair times, improved transportation), in addition to starting early. Unfortunately, the costs to provide pipeline response are beyond the scope of ASM. In the end, without pipeline response improvements, the depot would have to add an additional quantity of spares to reach the desired DSO (shown on the bottom row of Table 5).

Conclusions and Recommendations

When it comes down to the wire and the enemy is upon you and you reach into your holster, draw your pistol and level it at your adversary, the difference between a click and a bang is logistics.

--Editors of Loglines

AEFs were established to deal with the uncertain future. This uncertainty has implications for inventory in the logistics system. When looking to save costs within the Department of Defense, inventory is an easy target. However, it is inventory that provides available aircraft. Readiness spares packages provide inventory for a 30-day period of wartime operations. This inventory provides the ultimate customer service measure: aircraft availability. However, it is also quite expensive (a ten-aircraft unit of KC-135s can have an RSP valued in excess of $7M).

During Operation Allied Force, tanker units deployed with readiness spares kits that were at 68 percent of their authorized inventory level. For AEF operations, that may not attract a great deal of concern, as it is easy to think that an AEF will respond to small-scale contingencies. Small-scale contingencies could easily be viewed as a subset of an MTW that would not require the same amount of spares. However, Allied Force showed that basing options and mission requirements could result in sortie rates and durations higher than those planned in the WMP. In these cases, responding with an appropriate number of spares will be important for future operations.

Therefore, determining an appropriate number of spares becomes important. The Aircraft Sustainability Model is the Air Force's official tool for this purpose. As this project demonstrates, ASM easily shows the customer service and cost tradeoff of this inventory decision. This project did demonstrate a higher degree of robustness in aircraft availability than it did in costs. This effect can lead to policy changes to reduce inventory in situations where the smaller percentage of available aircraft can successfully perform the mission. In contrast, diminishing spares availability can have an increasingly negative effect on aircraft availability. Based on this, RSP fill rates should not be allowed to fall out of the area where they demonstrate the robustness around aircraft availability. For further proof, actual data from a number of individual units that participated in Allied Force should be modeled to determine if this relationship exists across the board. It is possible the relationship varies somewhat ba sed on the scenario or weapon system. It would be beneficial to continue to analyze this relationship for future improvements.

In this analysis, depot response improvements could improve the number of available aircraft. Even though this is quite intuitive, the analysis should provide yet one more reason to continue depot response and pipeline time improvements. These improvements, once quantified, must then be added to the logic of the ASM to allow reduction of RSP quantities. With pipeline response improvements, smaller RSPs will maintain or improve aircraft and allow the Air Force to reap inventory cost savings.

Another benefit of improved depot response is the ability to provide support to units in all theaters, not just units involved in AEF operations. Operation Allied Force proved the depot's capability to do so.

Finally, ASM proved to be a valuable tool. The relationships between customer service and costs are easily demonstrated through the use of ASM. Its use should be encouraged throughout the community responsible for Air Force inventory management. It brings a greater level of understanding to the tradeoffs involved in inventory decisions.

In the end, tanker operations in Operation Allied Force were extremely successful. The inventory policies concerning readiness spares packages supported this operation, even though the beginning inventory balances were lower than planned. Some robustness around the available aircraft measure, when compared with cost values, was found via what-if analysis. This characteristic has the potential to allow for additional cost savings and should be studied further with actual Operation Allied Force data. However, danger is evident if inventory levels fall too far, as shown in Figure 5. Finally, the Air Force's reach-back capability showed potential for improving customer service and reducing costs--these improvements should be institutionalized and then find their way into the ASM logic to reduce the inventory stored in an RSP.

Current RSP policies and computational assumptions will only support future AEF deployments when the operations tempo of those deployments is equal or less than the WMP scenario. In those cases where that is not the case, such as Operation Allied Force, improved reach-back capability can offset the resulting inventory shortfall.

Major Larvick is commander of the 100th Supply Squadron, RAF Mildenhall. At the time of the writing of this article, he was a student at the Air Command and Staff College.

Notes

(1.) Air Force Doctrine Document 1, Air Force Basic Doctrine, Sep 97, 38.

(2.) Dr Douglas J. Blazer, "Improving the Air Force Logistics System--Getting Back to Basics," Logistics on the Move, Air Force Logistics Management Agency, Apr 99, 20.

(3.) Joint Pub 4-0, Doctrine for Logistic Support of Joint Operations, 27 Jan 95, I-1.

(4.) Air Force Basic Doctrine, 34.

(5.) Doctrine for Logistic Support of Joint Operations, II-1.

(6.) J. R. Tony Arnold, Introduction to Materials Management, 3d ed, Columbus, Ohio: Prentice Hall, 1998, 223.

(7.) James R. Stock and Douglas M. Lambert, Strategic Logistics Management, 2d ed, Homewood, Illinois: Richard D. Irwin Inc, 1987, 395.

(8.) Stock and Lambert, 396.

(9.) Stock and Lambert, 397.

(10.) Ibid.

(11.) Ibid.

(12.) Stock and Lambert, 398.

(13.) Arnold, 228.

(14.) Arnold, 230.

(15.) Ibid.

(16.) Arnold, 230-231.

(17.) Arnold, 231-232.

(18.) Arnold, 233.

(19.) Blazer, 21.

(20.) Maj Christopher J. Burke and Dr Vincent A. Mabert, "Quickness Versus Quantity: Transportation and Inventory Decisions in Military Reparable-Item Inventory Systems," Air Force Journal of Logistics, Vol XXI, No 3, 1998, 4.

(21.) Maj Marvin A. Arostegui, Jr, AFIT/EN Course Material, LOGM 628, Reparable Inventory Management, Air Force Institute of Technology, nd.

(22.) Capt Marvin A. Arostegui, Jr, and Capt Jon A. Larvick, "Demonstrating the Effects of Shop Flow Process Variability on the Air Force Depot Level Reparable-Item Pipeline," master's thesis, AFITI/GLM/LSM/92S-1, School of Systems and Logistics, Air Force Institute of Technology (AU), Wright-Patterson AFB, Ohio, Sep 92, 13-15.

(23.) Dr Randall King and Cal John Gunselman, "RSP Computation: Policy and Practice" (presentation to Gen John Jumper, USAFE Commander), 1 Dec 99.

(24.) Air Force Manual (AFM) 23-110. USAF Supply Manual, Apr 99, Chap 14, 8.

(25.) AFM 23-110, 9.

(26.) AFM 23-110, 17.

(27.) Michael F. Slay, et al, Optimizing Spares Support: The Aircraft Sustainability Model. LMI Report AF50lMRl, McLean, Virginia: Logistics Management Institute, Oct 96, 1-1--1-2.

(28.) Slay, et al, 2-2.

(29.) Ibid.

(30.) Ibid.

(31.) Michael F. Slay and Randall M. King, Prototype Aircraft Sustainability Model, LMI Report AF601R2, Bethesda, Maryland, Logistics Management Institute, March 1987, iii-iv.

(32.) Slay, et al, iv.

(33.) Senate Armed Services Committee, Hearing on Kosovo After-Action Review, Joint Statement of William S. Cohen, Secretary of Defense, and Gen Henry H. Shelton, Chairman of the Joint Chiefs of Staff, 14 Oct 99.

(34.) Ibid.

(35.) Lt Gen William Begert, "Kosovo & Theater Air Mobility," Aerospace Power Journal, XIII, No 4, Winter 1999, 14.

(36.) Headquarters Air Mobility Command, LGSWA, "KC-135 Readiness Spares Packages (RSP) Fill Rates for Kosovo," Point Paper, 2 Jul 99.

(37.) Headquarters Air Mobility Command, LGSWA, "Total Deployed Supply Support," Briefing, 28 May 99. Operation Allied Force did not officially end until 9 Jun 99. This data is from 28 May 99/1900z.

(38.) Begert, 14.

(39.) Headquarters Air Mobility Command, LGSW, "Noble Anvil--The AMC Support Perspective," Briefing, nd.

(40.) Ibid.

(41.) Maj Joni R. Lee, "Prepositioning: A Logistics Concept for the AEF," Research Report, Air Command and Staff College, Maxwell AFB, Alabama, 1999, 3.

(42.) Ibid.

(43.) Hearing on Kosovo After-Action Review.

(44.) Maj David M. Cohen, "The Vital Link: The Tanker's Role in Winning America's Wars," Research Report (Draft), Air Command and Staff College, Maxwell AFB, Alabama, 2000, 16.

(45.) Briefing, Headquarters Air Mobility Command, LGSW, "Noble Anvil--The AMC Support Perspective," nd.

                       Deployed KC-135 Fill Rates
Mar  68
Jun  77
Note: Table Made from bar graph

[Graph omitted]

[Graph omitted]

                                Baseline
                                     Resulting
          Line                        Aircraft
          Items  Units     Cost     Availability
Baseline
Package    219    691   $7,091,681     83.21%
                          Sortie Duration Test
                                                       Resulting
           Sortie   Sortie  Line                        Aircraft
          Duration   Rate   Items  Units     Cost     Availability
Baseline
Package      X        Y      219    691   $7,091,681     83.21%
Test #1    1.1(X)     Y      219    731    7,653,498     83.10%
Test #2    1.2(X)     Y      219    751    8,126,672     83.12%
                            Sortie Rate Test
                                                       Resulting
           Sortie   Sortie  Line                        Aircraft
          Duration   Rate   Items  Units     Cost     Availability
Test #1    1.1(X)     Y      219    731   $7,653,498     83.10%
Test #1A   1.1(X)   1.1(Y)   219    757    8,282,561     83.68%
Test #1B   1.1(X)   1.2(Y)   219    788    8,730,236     83.07%
Test #2    1.2(X)     Y      219    751    8,126,672     83.12%
Test #2A   1.2(X)   1.1(Y)   219    790    8,753,289     83.05%
Test #2B   1.2(X)   1.2(Y)   219    835    9,346,651     83.05%
                       Customer Service Measures
                                                       Resulting
           Sortie   Sortie  Line                        Aircraft
          Duration   Rate   Items  Units     Cost     Availability
Baseline
Package      X        Y      219    691   $7,091,681     83.21%
Baseline
Package    1.1(X)     Y      219    691    7,091,681     82.92%
Baseline
Package    1.1(X)   1.1(Y)   219    691    7,091,681     81.12%
Baseline
Package    1.1(X)   1.2(Y)   219    691    7,091,681     80.86%
Baseline
Package    1.2(X)     Y      219    691    7,091,681     78.86%
Baseline
Package    1.2(X)   1.1(Y)   219    691    7,091,681     78.78%
Baseline
Package    1.2(X)   1.2(Y)   219    691    7,091,681     76.57%

[Graph omitted]

                            Reach-Back Test
                Sortie   Sortie  Line
               Duration   Rate   Items  Units     Cost
Worst-case
Package         1.2(X)   1.2(Y)   219    691   $7,091,681
Reach-back
Package         1.2(X)   1.2(Y)   219    691    7,091,681
Reach-back
repair + adds   1.2(X)   1.2(Y)   219    759    8,172,490
                Resulting
                 Aircraft
               Availability
Worst-case
Package           76.57%
Reach-back
Package           79.30%
Reach-back
repair + adds     83.11%

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COPYRIGHT 2004 Gale Group