Assets Versus Requirements: Why Asset-Based Central Leveling Is a Good Idea

The DO28 Central Leveling System has been assigning base levels for recoverable spares in the Air Force since 1982. The DO28 system assigns base levels by finding multi-echelon (depot/base) allocations of computed worldwide requirements to minimize base expected backorders (EBOs). Spares requirements, however, rarely agree with the number of spare assets actually in the system. The Air Force can reduce base EBOs another 10 to percent by modifying the D028 system to take actual asset quantities into account. Final reduction in system- wide base EBOS will depend on the asset categories selected for the inclusion in the system. The report includes a description of the history theory, and operation of the DO28 system; analysis and comparison of the effects of asset- based versus requirements-based leveling for sample DO28 items; and a discussion of asset categories to include in an asset-based system. Keywords: Assets, Base levels, Base supply, Depot levels, Depot supply, Distribution, Inventory management, Inventory modeling, Inventory theory, Material management, Replenishment spares, Requirements, Spares, Computer applications, Computer programs.