Transfer Pricing for Air Force Depot-Level Reparables

by Laura H. Baldwin, Glenn A. Gotz


Full Document

FormatFile SizeNotes
PDF file 5.3 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback117 pages $15.00 $12.00 20% Web Discount

The Air Force implemented stock funding to manage most depot-level reparables (DLRs) in FY 1992. The working capital fund charges customers for their purchases of serviceable DLRs, pays them for the return of items needing repair or replacement, and purchases depot-level repair and replacements. Stock funding gives customer commands responsibility for obtaining budgets to purchase DLR repairs and replacements. The market-like system was intended to provide customers with incentives to make cost-effective repair decisions at the local level. This report discusses problems that may result from these incentives that affect the Air Force's ability to efficiently meet its support goals. The authors recommend that the structure of DLR prices be changed to improve the compatibility of customer incentives and overall Air Force support goals. The price system should be structured so that customers face the costs their decisions impose upon the support system. In other words, costs should be recovered through a series of charges to the customers responsible for generating those costs.

Table of Contents

  • Preface

  • Figures

  • Tables

  • Summary

  • Acknowledgements


  • Acknowledgements


  • Chapter One


  • Chapter Two

    The Role of DLR Prices in Decisions

  • Chapter Three

    Structure of DLR Prices

  • Chapter Four

    Problems with the Current Pricing System

  • Chapter Five


  • Chapter Six


  • Appendix A

    A Review of the Economics and Accounting Literature on Internal Transfer Prices

  • Appendix B

    Derivation of Pricing Recommendations

  • Bibliography

Research conducted by

This report is part of the RAND Corporation monograph report series. The monograph/report was a product of the RAND Corporation from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.