çÿY) nto-an FM 710-27 Vs\ I S' * 'do *4 FIELD MANUAL y ± LOGISTICS INVENTORY MANAGEMENT RETURN TO THEMMY LIBRARY ROOM 1A518 PENTAGON W ASHINGTON, D. C\20310 HEADQUARTERS, DEPARIMENT\OF THE ARMY ^ . ■ à 'GO FM 710-27 3LD MANUAL HEADQUARTERS DEPARTMENT OF THE ARMY No. 71C WASHINGTON, DC, 1 January 1980 Paragraph Page PART ONE. lîKmODUCTION 1-1 CHAPTER 1. GENERAL 1-1, 1-2 1-1 CHAPTER 2. THE ROLE OF INVENTORY CONTROL. 2-1 Section I. General. 2-1-2-5 2-1 II. Complexity oï\Inventory Control. 2-6-2-S 2-3 III. Problems. 2-9-2-13 2-5 IV. Description of Inventory Control Functions. 2-14 2- 7 PART TWO. FUNCTIONS OF INVENTORY CONTROL. 3- 1 CHAPTER 3. CATALOGING. 3-1 Section I. The Significance of Catàloging. 3-1-3-4 3-1 II. Introduction of New Equrpment/Items. 3-5-3-S 3- 10 CHAPTER 4. MAJOR ITEM MANAGEMENT. 4- 1 Section I. General.. 4-1 4-1 Identification 4-2-4-S 4-1 Management at the National LeO^l 4-6-4-S 4-3 The Army Acquisition Objective (ASAO) and the Army Materiel Plan 4-9-4-13 4-5 Section Distribution Requirements and Distribution Planning 4-14—4 17 4-7 The Assets Position _A_ 4-18-4 20 4- 9 SECONDARY ITEM MANAGEMEN 5- 1 General. 5-1, 5-2 5-1 Management Methods for Secondary Items 5-3-5-S 5-1 Supply Management Techniques X- 5-9-5-14 5-7 Requirements Determination Y 5-15-5-18 5-14 Inventory Systems Costs X- 5-19-5-29 5-22 The Economic Order Quantity Concept Y 5-30-5-37 5-32 Probabilistic Inventory Models \ 5-38-5-42 .5-39 Demand Forecasting \ 5-43-5-47 5-43 Mobilization Requirements Y. 5-48-5-50 5-53 Security Assistance \ 5-51, 5-52 5- 55 ACQUISITION DIRECTION 6- 1 Section I. Functions of Acquisition X 6-1-6-4 6-1 II. Organization for Acquisition 6- \ 6-5-6-10 3 CHAPTER 7. DISTRIBUTION MANAGEMENT 7- 1 Section I. Objective and Contents V. 7-1-7-7 7-1 II. The Military Standard Logistics Data Systems 7-5 \ 7-8, 7-9 III. Requisitioning Storage \ 7-10-7-13 7-8 IV. Distribution of All Classes of Supply V. 7-14-7-22 7-12 V. The Direct Support System/Air Line of Communication7- \ 7-23-7-25 15 CHAPTER 8. DEPOT MAINTENANCE MANAGEMENT 8- 1 Section I. Introduction to the Army Maintenance System Y 8-1-8-4 8-1 II. Responsibilities for Army Maintenance Management X S-5-8-9 8- 4 III. Plans, Programs, Budgets, and Funds for Depot Maintenance X 8-10-8-12 8-6 IV. Development and Executing the Depot Maintenance Program X 8-13-8-17 8-6 V. Reporting Depot Maintenance Accomplishment 8-10 X 8-18, 8-19 DISPOSAL 9- 1 The Defense Materiel Utilization Program I 9-1-9-6 9-1 Screening of Excess Property A 9-7-9-9 9-4 Transfer of Excess Property V- 9-10-9-12 9-5 Sale, Abandonment, and Destruction of Foreign Excess Personal Property \ 9-13-9-19 9-6 I > PART ONE INTRODUCTION CHAPTER 1 GENERAL 1-1. Purpose results in the formulation of management decisions a. This manual presents Department of the Army concerning the entry, retention, consumption, or dis- doctrine pertaining to inventory management by posal of materiel in the system. Corollary functions prescribing the principles, policies, organizations, that stem from requirements planning are : program- and techniques necessary to attain an efficient inven- ing, budgeting, cataloging, acquisition, distribution, tory management system as a part of total logistics maintenance, and materiel utilization and disposal. management. It furnishes guidance to commanders, b. This manual is primarily concerned with the staff officers, and logistics personnel who are con- comprehensive coverage of the six functions of inven- cerned directly or indirectly with the various func- toTy management performed at the national inven- tions of inventory management. It also provides tory control points in the Continental United States, material for use in appropriate courses of instruction namely cataloging, requirements determination, ac- in the Army school system. quisition direction, distribution direction, mainte- b. Users of this manual are encouraged to submit nance direction, and materiel utilization and recommended changes or comments to improve the disposal. manual. Comments should be keyed to the specific c. The subject is developed in two parts: page, paragraph, and line of the text in which the (1) Part One: General—Outlines the purpose change is recommended. Reasons will be provided for and scope of the manual. Provides a general back- each comment to insure understanding and complete ground discussion of the functions of inventory man- evaluation. Comments should be prepared using DA agement performed at the national inventory control Form 2028 (Recommended Changes to Publications points. and Blank Forms) and forwarded direct to the Com- (2) Part Two : Function of Inmentcn/ Control— mandant, United States Army Logistics Management Provides a comprehensive description and analysis of Center, ATTN: DRXMC-MR-I, Fort Lee, VA the concepts, programs, and techniques employed in 23801 (see AR 310-3 for format on corrections and the performance of each of the basic functions of in- changes). ventory control. A separate chapter is devoted to each c. The word “he,” when used in this publication, of these areas : represents both the masculine and feminine genders (а) Cataloging. unless otherwise specifically stated. (б) Major Item Management. (e) Secondary Item Management. 1-2. Scope (d) Acquisition Direction. a. Basic management task of( e ) theDistribution Army logistics Management. system requires that the interlocking activities of (/) Depot Maintenance Direction. that system provide a flexible yet adequate control of {g) Stock Control Management. the total inventory. Requirements planning is the (h) Materiel Utilization and Disposal Man- fundamental function of inventory management that agement. 1-1 CHAPTER 2 THE ROLE OF INVENTORY CONTROL Section 1. GENERAL 2-1. Introduction to Inventory Control 2-3. Inventory Control and the Life Cycle The subject of inventory control is prevalent of Materiel throughout all aspects of the military logistics sys- In addition to determining the relationship of inven- tem. Attaining the most effective and efficient inven- tory control to overall Army logistics, it is also neces- tory control is a primary objective in the materiel sary to understand the position of inventory control support mission of the Army. To fully understand in the life cycle of materiel. The life cycle of a sys- the inventory control relationship to the overall tem or an item of materiel begins with its concep- logistics mission, a review of the total logistics man- tion, progressing through research and development, agement responsibilities is necessary. Army logistics continuing through its production, deployment, and (AR 310-25) is the science of planning and carrying use, and ending with reutilization or disposal when out the movement and maintenance of forces. In its the item becomes excess, uneconomically reparable, most comprehensive sense, these aspects of military or obsolete. The major functions of inventory con- operations deal with : trol that occur during the different phases of the life a. Design and development, acquisition, storage, cycle are : movement, distribution, maintenance, evaluation, a. Exploration of Alternative Systems Concepts and disposition of materiel. Phase. b. Acquisition or furnishing of services. (1) Development/acquisition strategy. (2) Distribution/deployment variables. 2-2. The Objective of Inventory Control (3) Qualitative requirements planning. The objective of inventory control is effective, effi- b. Demonstration and Validation Phase. cient, and economical supply to the military forces (1) Cataloging. in their assigned missions. With the many compro- (2) Quantitative requirements planning. mises and trade-offs that are necessary in the opera- (3) Acquisition direction/planning. tion of Army logistics, this ultimate objective can (4) Distribution planning. become obscure, for at all levels of the supply system (5) Basis of issue determination. there are limitations or restrictions in availability of (6) Maintenance planning. moneys, transportation, facilities and labor, as well (7) Facility requirement planning. as materiel. Logisticians specify standards for mate- c. Full-Scale Engineering Development Phase. riel support that will insure an acceptable level of service to supported units, and inventory managers ( 1 ) Quantitative requirement planning. continually examine every function in the system in (2) Acquisition direction. an attempt to balance available resources to reach or (3) Distribution planning. surpass the defined standards of performance. How- (4) Maintenance package requirement. ever, even with the best possible management prac- (5) Cataloging finalized. tices, emergency supply actions are necessary to meet (6) Provisioning plan. unpredictable contingencies. The standards set for (7) BOIP revised/finalized. any function serve as guidelines for operating per- (8) Facility requirement update/deployed. sonnel and control indicators for management. The (9) Provisioning plan implemented. ultimate criteria for evaluating the inventory man- d. Production and Deployment Phase. agement system is success in supporting the soldier (1) Quantitative requirement computation. in the field with what is needed, when, where, and (2) Acquisition direction. in the condition and quantity required at minimum (3) Distribution management. expenditure of resources. (4) Maintenance management. 2-1 (5) Stock control. (4) Classes of supply. (6) Reutilization and disposal. 6. The first approach to viewing the supply system (Although an inventory manager may become in- is by degree of criticality of the materiel being man- volved in any of the foregoing functions, his man- aged. Ammunition, for example, is managed inten- agement effort is mainly expended in the Production sively at all levels because of its essentiality. Bulk and Deployment Phase of the life cycle of materiel.) petroleum is another combat-essential item, and, be- 2—4.