The Army's currently high (relative to demand) parts inventory is seen by some as a source of waste, but disposing of too much inventory can increase costs in the long run. The Army should assess the cost of inventory not on its total dollar value but instead on long-term factors such as storage costs, repair costs, and the risk of rebuy. RAND has developed formulas to estimate long-run cost of inventory based on these factors.
This research was sponsored by the United States Army and conducted within the Military Logistics Program, a part of the RAND Arroyo Center.
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