Right Price, Fair Credit: Criteria to Improve Financial Incentives for Army Logistics Decisions by Ellen M. Pint, Paul Steinberg, John R. Bondanella |, Paperback | Barnes & Noble
Right Price, Fair Credit: Criteria to Improve Financial Incentives for Army Logistics Decisions

Right Price, Fair Credit: Criteria to Improve Financial Incentives for Army Logistics Decisions

by Ellen M. Pint, Paul Steinberg, John R. Bondanella
     
 

Under the Army's financial management system for spare parts, logistics customers receive budgets to buy spare parts from the supply system and receive credits for returning parts to the supply system, either for repair or because they are no longer needed in local inventories. The Army's wholesale inventories of spare parts are financed by a stock fund, which uses

Overview

Under the Army's financial management system for spare parts, logistics customers receive budgets to buy spare parts from the supply system and receive credits for returning parts to the supply system, either for repair or because they are no longer needed in local inventories. The Army's wholesale inventories of spare parts are financed by a stock fund, which uses its income from the sale of parts, net of credits issued to customers, to pay for repairs and procurement of replacement parts. Some installation-level, or retail, inventories are also financed by stock funds. During fiscal year 2001, the Army's stock funds were in a period of transition from separate wholesale and retail components to a Single Stock Fund (SSF). As part of this change, the Army implemented new price and credit policies for spare parts. In this document, the authors introduce a set of criteria to assess price and credit policy changes in terms of their effectiveness in meeting the overall objective of maintaining the logistics customer's ability to meet mission requirements while keeping weapon systems in operating condition at the lowest total cost to the Army. The authors then use these criteria to compare and evaluate pre-SSF,SSF, and proposed future price and credit policies, and define the characteristics of an optimal Army price and credit policy.

Product Details

ISBN-13:
9780833029522
Publisher:
RAND Corporation
Publication date:
03/28/2002
Pages:
96
Product dimensions:
6.18(w) x 9.02(h) x 0.26(d)
Lexile:
1650L (what's this?)

Read an Excerpt

Right Price, Fair Credit

Criteria to Improve Financial Incentives for Army Logistics Decisions
By Ellen M. Pint Marygail K. Brauner John R. Bondanella Daniel A. Relles Paul Steinberg

Rand Corporation

Copyright © 2002 RAND
All right reserved.

ISBN: 9780833029522


Preface

This report discusses how prices and credits for spare parts affect the behavior of logistics customers and suppliers and the performance of the Army logistics system as a whole. It describes a set of systemwide criteria for evaluating price and credit policies and applies them to current and proposed policies. It then uses the criteria as a basis to develop the characteristics of an optimal price and credit policy that would support the needs of logistics customers at a lower total cost to the Army.

This analysis is an outgrowth of previous research that evaluated the Army's Integrated Sustainment Maintenance program and proposed price and credit policies for Single Stock Fund (SSF), and that applied Velocity Management's (VM's) "Define-Measure-Improve" (D-M-I) methodology to the Army's logistics financial management system. It should be of interest to financial managers and logistics customers and suppliers in the Army and the Department of Defense (DoD), as well as to business organizations that use transfer pricing mechanisms to promote efficient internal allocation of resources.

The research documented here was sponsored by the Army's Deputy Chief of Staff for Logistics and conducted in the Military Logistics Program of RAND Arroyo Center. The Arroyo Center is a federally funded research and development center sponsored by the United States Army.

(Continues...)



Excerpted from Right Price, Fair Credit by Ellen M. Pint Marygail K. Brauner John R. Bondanella Daniel A. Relles Paul Steinberg Copyright © 2002 by RAND. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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