A Model for Predicting the Inventory of Navy Spares

As part of the yearly planning process, OSD analysts assess the services' budget requests for secondary items. Although good planning dictates that these requests be judged by the effects of the budgets on inventories and the readiness and sustainability of the operating forces, these links have not been developed. This study takes the first step in providing such links by developing an aggregate model for use by OSD analysts to predict the future inventories of Navy spares. Inventories are predicted from spares budgets, Fleet characteristics that determine spares usage, and historical factors derived from past data. The model was constructed by identifying the principal flows of inventory in the supply system, and relating them to the inputs using simple linear expressions. The paper validates the model using data from the 1980-88 buildup, and illustrates the model's use in forecasting. Appendices briefly describe the inventory management systems of the three military services and cost-estimating relationships for spares usage by ships and aircraft.