Open Access"Extra!" Using the Newsvendor Model to Optimize War Reserve Storage
Author(s) -
MAJ Minou Pak,
MAJ Joshua L. Peeples,
Joseph T. Klamo
Publication year - 2021
Publication title -
defense acquisition research journal
Language(s) - English
Resource type - Journals
eISSN - 2156-8405
pISSN - 2156-8391
DOI - 10.22594/dau.21-865.28.04
Subject(s) - newsvendor model , economic shortage , operations research , computer science , sample (material) , function (biology) , inventory cost , operations management , supply chain , business , engineering , marketing , linguistics , philosophy , chemistry , chromatography , evolutionary biology , government (linguistics) , biology
The United States Marine Corps (USMC) Installation and Logistics Command requested a study for determining appropriate inventory levels of war reserve materiel to meet future operational needs under surge demands in uncertain environments. This study sought to explore a potential approach by using the common newsvendor model, but modified for a military scenario. The authors’ novel version of this core concept considers the purchase and storage costs of an item and proposes an intangible cost function to capture the consequences of a shortage. Further, they show a sample application of the model using a ubiquitous military item—the BA-5590/U battery. The output of the model provides USMC with a new tool to optimize inventory levels of a given item of interest, depending on scenario inputs.