Allocating the increased operational costs in retail prices at the Defense Electronics Supply Center as a result of Defense Management Report Decision 901.

120 Pages·1.8 MB·en_US

by  Ahern, Michael G.;McMasters, Alan W.

NAVAL POSTGRADUATE SCHOOL
Monterey California
,
THESIS
ALLOCATING THE INCREASED OPERATIONAL COSTS IN
RETAIL PRICES AT THE DEFENSE ELECTRONICS
SUPPLY CENTER AS A RESULT OF DEFENSE
MANAGEMENT REPORT DECISION 901
by
Michael G. Ahern
June 1991
Thesis Advisor: Alan W. McMasters
Approved for public release; distribution is unlimited
T256260

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4 PERFORMING ORGANIZATION REPORT NUMBER(S) 5 MONITORING ORGANIZATION REPORT NUMBERfS,
6a NAME OF PERFORMING ORGANIZATION 6b OFFICE SYMBOL la NAME OF MONITORING ORGANIZATION
(// applicable)
Naval Postgraduate School Code 36 Naval Postgraduate School
6c ADDRESS {City, State, and ZIPCode) 7b ADDRESS(City, State, and ZIPCode)
Monterey, California 93943-5000 Monterey, California 93943-5000
3a NAME OF FUNDING/SPONSORING 8b OFFICE SYMBOL 9 PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER
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8c ADDRESS(City, State, and ZIPCode) 10 SOURCE OF FUNDING NUMB-RS
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11 TITLE (Include Security Classification)
ALLOCATING THE INCREASED OPERATIONAL COSTS IN RETAIL PRICES AT THE DEFENSE
ELECTRONICS SUPPLY CENTER AS A RESULT OF DEFENSE MANAGEMENT REPORT
12 PERSONAL AUTHOR(S)
Ahern, Michael G.
13a TYPE OF REPORT 3b TIME COVERED 14 DATE OF REPOR1 (Year, Month Day) 51P0A5GE COL NT
Master's Thesis FROM TO 1991, June
TJ£heSUvPiPeLEwMsENTeAxRpYrNeOsTsATeIdON.in t,hi.s thesis are th, ose of_ the aut,hor and, d,o not ref„,lect t,he of_f_.ici.al_
policy or position- of the Department of Defense or the U.S. Government.
17 COSATi CODES 18 SUBJECT TERMS (Continue on reverse if necessary and identify by block number)
FIELD GROUP SUB-GROUP Surcharge; Defense Management Report Decision;
Stock Fund; DLA; DESC
19 ABSTRACT (Continue on reverse if necessary and identify by block number)
Defense Management Review Decision (DMRD) 901 requires inventory con-
trol points managing Department of Defense (DoD) stock-funded material to
include all the costs of doing business in the stock fund surcharge. The
inventory control points will no longer receive direct operational and
maintenance (O&M) funding in the defense budget. As a result of DMRD 901,
for fiscal year 1991, the Defense Electronics Supply Center (DESC) must
recoup, through its operational surcharge, $84.1 million of its own opera-
tional costs and $100.9 million of DLA Headquarters and support activity
costs (a total of $185.0 million). The increased surcharge has signifi-
cantly raised the retail price DESC's customers must now pay for material
requisitioned. This thesis will present alternative methods for allocating
costs by changing the allocation base and examine the use of a fixed order
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#11 - TITLE - (CONTINUED)
DECISION 901
#19 - ABSTRACT - (CONTINUED)
charge to determine their effect on the retail prices
of material.
DD Form 1473, JUN 86 (Reverse) security classification of this page
ii UNCLASSIFIED