Rationing safety stock in the USAF’s multi-echelon inventory system

The United States Air Force (USAF) operates one of the largest multi-echelon inventory systems in the world. Individual bases hold inventory to meet the demands of their customers at the base. These bases are re-supplied by central depots that are, in turn, re-supplied by vendors. The Air Force Logistics Command (AFLC) has proposed the adoption of a method of rationing assets at the depot as a means of improving weapon system availabilities. A large scale simulation model of the USAF’s multi-echelon inventory system was used to study the effects of such a rationing procedure. The simulation results demonstrate that the consequences of the proposed rationing scheme are contrary to what had been intuitively expected. In fact, the proposed policy change would have decreased rather than increased performance.