Calhoun: The NPS Institutional Archive

Theses and Dissertations Thesis Collection

1973

A review of shipboard allowance computation and

the use of military essentiality coding.

Matalavage, Joseph Anthony.

Monterey, California. Naval Postgraduate School

http://hdl.handle.net/10945/16783

A REVIEW OF SHIPBOARD ALLOWANCECOMPUTATION AND THE USE OF MILITARY

ESSENTIALITY CODING

Joseph Anthony Matalavage

I A WAG BOOTHIA HMATC OHM 00(AVAL ruosbi{Ml!UAit hbtm

Montersy, alifornia

Ti ppa4 J:

A REVIEWCOMPUTATION

ESS

OF SHIPBOARD ALLOWANCEAND THE USE OF MILITARYENTIALITY CODING

by

Joseph Anthony Matalavage

Thesis Advisor E. A. Zabrycki

March 1973

i 1 J 7

Apph.ovi2.ci ^ofi pubtic. tioJizas e.; <iit>Vvlhution untimttad.

A REVIEW OF SHIPBOARD ALLOWANCE COMPUTATIONAND THE USE OF MILITARY ESSENTIALITY CODING

by

Joseph Anthony MatalavageLieutenant Commander, Supply Corps, United States Navy

B. S., United States Naval Academy, 1961

Submitted in partial fulfillmentof the requirements for the

MASTER OF SCIENCE IN MANAGEMENT

from the

Library

Naval Postgraduate SchoolMonterey, California 93940

ABSTRACT

Currently the Navy is faced with one of its most severe

budgetary constraints in recent times. All programs and

policies are continually subject to review to determine if

greater improvement in dollar utilization can be achieved.

Of growing concern to Navy management is the large amount of

funds invested in shipboard inventories of repair parts.

While the computation of shipboard allowance lists is now

somewhat routine, further refinement is desirable to ensure

maximum cost effectiveness. In this regard, the shipboard

allowance list computation procedures are described and the

concept and objectives of military essentiality coding are

investigated. The application of military essentiality cod-

ing and the inherent problems created within the present

shipboard system are discussed. In conclusion/ the author

recommends some variations to the present shipboard militar '

essentiality system.

TABLE OF CONTENTS

Chapter Page

I . INTRODUCTION 1

Purposem 1

Background 2

II . NATURE OF THE PROBLEM 5

Overview 5

III. METHODOLOGY 7

IV. ALLOWANCE LIST COMPUTATION PROCEDURES 9

Conventional Method 9

FLSIP Method 10

Population Data 14

Replacement Data 14

CNO Exclusion Criterion 17

Shipboard MEC System 18

Technical Override 23

V. ADAPTATIONS OF THE ESSENTIALITY CONCEPT 25

The Polaris Military Essentiality CodingSystem 25

Data Accumulation 26

Coding Structure 27

Mission Essentiality in Aviation Support.. 31

Military Essentiality of Naval AviationRepair Parts 31

An Essentiality Index for EvaluatingSystem Design Proposals 33

An ARMY MEC Application 3 6

Page

VI. ALTERNATIVES FOR A REVISED SHIPBOARD MECSYSTEM 41

Alternative A 43

Alternative B 44

Alternative C 47

VII. RECOMMENDATIONS AND SUGGESTED TOPICS FOR FURTHERSTUDY 50

Recommendations 50

Suggested Topics for Further Study 51

VIII. SUMMARY AND CONCLUSIONS 53

BIBLIOGRAPHY 55

APPENDIX A - Definitions 57

APPENDIX B - Cost vs. Effectiveness Graphs UsingVarious CNO Exclusion Criterion. . .60

APPENDIX C - Polaris Essentiality Matrix 66

APPENDIX D - Naval Aviation Repair Parts StudyEssentiality Matrix 69

APPENDIX E - Mission Essentiality Index forSystem Design Proposals 71

APPENDIX F - Sample Page from COSAL "B" Index.. 73

/

CHAPTER I

INTRODUCTION

PURPOSE

Since Navy ships must be ready to operate at all times

on a self-sustaining basis for extended periods of time, the

logistian is continually faced with the challenge of properly

loading these ships with the necessary repair parts to ensure

maximum equipment availability during the duration of the

operating period. If cost and space were unlimited, every

applicable repair part could be placed on board to meet any

possible demand. This is totally unrealistic, however, and

since the present allowance computation system is not complete-

ly fulfilling its objective, it is the purpose of this paper

to examine the shipboard allowance list computation process;

describe the use of the military essentiality coding systei

used in the computation; discuss several adaptations of th<

essentiality concept to Defense systems; and explore the

possibility of modifying the shipboard military essentiality

coding system to provide for a system more responsive to the

logistics trade-off decisions encountered in the operating

management of modern weapon systems.

BACKGROUND

In the past, many innovations have been adapted for the

improvement of inventory management. With the aid of the

computer and supplemented by analytical techniques, many inven-

tory control and allowance list computation methods and models

have been successfully formulated. As could be expected,

numerous variables are taken into account during the com-

putations. Since the mid-1950 's however, the concept of item

essentiality has had an influence on the inventory manager's

decision process. To provide maximum logistic support within

the constraints of cost and space, it was recognized that-

some items are more critical to the successful operation of

equipment than others. In other words, the failure of certain

items could cause serious degradation or cause total inoper-

ability of the equipment. It therefore becomes more esseni .al

to identify and stock these replacement parts than _hose

considered less important to the successful operation of

the equipment. As noted by Soloman in one of his many papers

on this subject "there was an increasing realization that to

For a discussion of the more popular techniques seeZehna, Peter, et al, Selected Methods and Models in MilitaryOperations Research , Department of Operations Research andAdministrative Sciences, Navy Postgraduate School, Monterey,California

.

do nothing about creating military essentiality measurements

is the equivalent to implicitly doing something which is almost

sure to be unsatisfactory ... that is, to treat all items as if

their essentiality v;ere equal".

The Navy was quick to recognize the essentiality concept

and began advanced studies in this area in 1957. Supported

by the Office of Naval Research, the George Washington Univer-

sity Logistics Research Project (LRP) explored the use of

military worth as applied to the computation of submarine

allowance lists. The worth of each repair part was considered

to be a function of its importance to its parent component

(including possible alternative actions) and the relative

importance of the parent component to the submarine's mission.

Results of the study demonstrated the fact that the construction

of reliable measurements which delineated the relative impor-

tance of repair parts was feasible. ^

The next major development was the derivation and appl -

cation of MEC (Military Essentiality Code) measurements for

the Polaris missile weapon system. As dictated by the incr ;ased

importance and complexity of this system over that of the

initial exploratory study in computing allowance lists for con-

ventional submarines, a more sophisticated MEC system

^Soloman, Henry, "An Exposition on the Development andApplications of Military Essentiality Measurements", GeorgeWashington University Logistics Research Project Serial T-198dated 15 June 1967.

3Denicoff Marvin and Soloman Henry, "Simulations ofAlternative Allowance List Policies" , Naval Research LogisticsReview, Vol. 7, No. 2, June 19 60.

was created for Polaris and will be discussed further in Chap-

ter V. However, in general, it had much in common with the

earlier submarine study.

The use of military essentiality was given its broadest

impetus when the MEC concept was directed for implementation

Fleet wide in computing shipboard allowance lists as part of

the Fleet Logistics Support Improvement Program (FLSIP)

.

Based on doctrine initiated by this program, the Chief of

Naval Operations (CNO) directed that when computing allowances

of insurance items

:

(1) Only those insurance items vital to the support of

the primary mission of a ship or unit, or vital to the safety

and welfare of personnel on board ship shall be included in the

allowance list.

(2) Insurance items will be included in minimum depth

(either unity or minimum replacement unit) , in those cases

where they are vital to ship prime missions.

(3) Shipboard allowances will reflect the mission essenti-

ality of each item.

This revised method for the computation of shipboard allowances

became commonly known as the FLSIP method for COSAL (Coordinated

Shipboard Allowance List) computation. Although much progress

has been made in the adaptation of military essentiality to

shipboard allowance computation, the program still has deficien-

cies which restrict the decision making process. These deficien 1

cies will be identified and discussed in subsequent Chapters.

^op cit, Soloman

5OPNAVINST 4441.12 dated 27 August 1964; subj ; SupplySupport of the Operating Forces.

CHAPTER II

NATURE OF THE PROBLEM

OVERVIEW

While the FLSIP method of allowance list determination

approaches the computation of shipboard repair part require-

ments in a logical manner, the system has an observed de-

ficiency in that it does not establish an order of priority

to the repair parts for intelligent decision making during

periods of budgetary cutbacks. It is severely limited in

providing sufficient data to stratify these priorities and

designate where best to apply limited financial resources.

The present system is incapable of distinguishing between the

relative importance of support for vitally coded laundry equip-

ment and vitally coded main propulsion equipment. Major repair

parts in support of either of these equipments are treated as

equals, as are any repair parts coded major to a vitally coded

equipment, no matter what the equipment may be. While use of

the military essentiality coding system in the allowance

computation has a substantial effect on whether or not a re-

pair part allowance candidate becomes an allowed item, its

deficiency lies in its basic structure which prevents the MEC

from being anything more than just a simple filtering devise to

eliminate insurance items in support of non-vital equipment.

And, even in this role, the effectiveness has been circumvented,

since approximately over 92% of all installed shipboard

components have been designated by the Fleet as Vital and

over 97% of all the repair parts have been designated as be-

ing of major importance to the components. While the great

imbalance of Vitally coded components leaves the impression

that the Fleet may have overreacted in assigning essentiality

codes to protect its on board support of installed components,

the CNO policy concerning insurance items cited in the intro-

ductory paragraph of Chapter I also appears to be a major

contributing factor to this situation. A justifiable inter-

pretation of "only those insurance items vital to the support

of the prime mission of the ship or unit, or vital to the

safety and welfare of personnel on board ship" may well encom-

pass over 90% of shipboard components. The major problem,

then, of shipboard allowance computation may be considered

as two-fold:

(1) The MEC system does not satisfy the designed objec-

tives normally associated with the essentiality concept.

(2) Central policy is not definitive enough to establish

a suitable MEC structure.

Many of the specific percentages and statistics weregraciously supplied by Mr. Jerry Gumenick (SUP 04312) of theAllowance and Load List Branch, Navy Supply System Commandduring various telephone conversations.

CHAPTER III

METHODOLOGY

The methodology employed in conducting this investigation

will draw upon the data gained through (1) interviews and

correspondence with various personnel associated with allowance

list preparation at the Navy Supply Systems Command, Washington,

D.C. , the Navy Ships Parts Control Center, Mechanicsburg , Pa.,

the Navy Fleet Material Support Office, Mechanicsburg, Pa.,

Lockheed Missile and Space Company, Sunnyvale, Calif., and

the Navy Electronics Supply Office, Great Lakes, 111., (2) per-

sonal experience gained as the Allowance and Load List Officer,

SPCC, Mechanicsburg, Pa., and (3) research of pertinent liter-

ature on the subject of essentiality. Special bibliographies

were assembled by the Defense Logistics Information Exchange,

Fort Lee, Virginia, and the Navy Postgraduate School library.

To provide a better understanding of the intricacies of ship-

board allowance computation, the past (Conventional) and the

present (FLSIP) methods of allowance computation will be

discussed. The individual variables in the FLSIP formula

will be analysed with particular emphasis on the function of

the MEC application. Several other successful MEC applications

will then be investigated, and based on a comparison of the

methods used in these applications, the weaknesses in the

shipboard method will be identified. In addition, an

examination of the OPNAY policy on insurance items will be

conducted and assuming some modifications to this policy,

several alternatives to the shipboard MEC system will be

presented. Recommendations and a closing summary will be

provided in the final two Chapters.

CHAPTER IV

SHIP ALLOWANCE LIST COMPUTATION PROCEDURES

Allowance determination procedures of the past were

based on tedious manual methods, but later were supplemented

by EAM (Electronic Accounting Machine) equipment. Mechanization

with computers added a new dimension to the allowance prepar-

ation process. The Navy progressed from the RIAL (Revised

Individual Allowance List) to the COSAL and with that, a new

era of sophistication was incorporated into allowance compu-

tation. With the conversion to COSALs, large amounts of

technical data were loaded into the ICP computer files. As

part of the procedures, all wearing parts listed on the APLs

(Allowance Parts Lists) were loaded with an assigned alpha-

betic allowance code. This code correlated to an allowance

table specifying an allowed quantity to support the parent

equipment for one year. The allowance table also provided

for the allowance quantity to increase in specific increments

depending upon the number of installed equipments on board.

This same repair part however, could also be used in other

installed equipments and very possibly be assigned different

allowance codes with different allowance tables for those

particular applications.

CONVENTIONAL METHOD

As the computer proceeded through its allowance com-

putation, the applicable allowance codes were aggregated

under the FSN (Federal Stock Number) of the repair part.

Based on a pre-set factoring system, the individual quanti-

ties of each repair part assigned to support the individual

equipments were cumulated and factored downward to achieve

what was considered the appropriate quantity to support all

the applicable equipments for one year. There was no con-

sideration given to any essentiality precedence. As long as

there was one allowance code assigned to the repair part, the

item was insured to appear on the allowance list. This factor-

ing system was known as the Conventional method for COSAL

computation.

FLSIP METHOD

In order to implement the revised OPNAV policy on ship-

board allowance computation, new data (i.e., MEC, BRF , etc.)

had to be loaded into the technical files. Upon completion,

the conversion to FLSIP COSALs began in conjunction with the

printing of the normally scheduled COSAL revisions (usually

when a ship goes through overhaul approximately every three

years) . The most significant changes in the FLSIP method of

computation in comparison to the Conventional method were

that:

(1) allowances were to provide an effectiveness of

90% for a period of 90 days vice one year's allowance,

(2) a formula was to be used to compute the allowed

quantity vice a factoring system, and

(3) demand and MEC had a major influence on the allowed

10

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11EXHIBIT A

quantity or disallowance as the case may be. The methodo-

logy, however, remained quite simple and is illustrated in

Exhibit A provided by SPCC (Ships Parts Control Center)

.

Prior to making any computations, items are screened by

7 .maintenance code to determine if the ship has the mainten-

ance capability to install the repair part. Those repair

parts coded higher than the ship's capability are eliminated

from further consideration. The allowance program then com-

putes the expected quarterly demand (CNO authorized stock

levels are presently established at 90 days) . It computes

this quantity by multiplying the on board installed popu-

lation of the item by the BRF (Best Replacement Factor °) to

yield the expected annual demand. This demand is then divided

by four (4) quarters in the year to produce the expected

quarterly demand. If the expected quarterly demand is equal

to or greater than one (1) , the item qualifies as a demand

based item. To determine the actual allowed quantity and to

comply with the OPNAV criteria of 90% effectiveness, a prob-

ability distribution is applied to the expected quarterly

demand to compute that quantity which would satisfy the anti-

cipated demand with 90% confidence. The remaining portion of

the FLSIP allowance program is concerned with the crux of the

allowance determination challenge the determination

7The maintenance code is loaded into the computerfiles during the provisioning process and is determinedby NAVSHIPS.

QA listing of Replacement Factors is given in Exhibit B.

Information was provided by SPCC, Mechanicsburg , Pa.

12

EXHIBIT B

REPAIR PART REPLACEMENT FACTORS

The Navy is continually trying to improve its demand

prediction capability by using the best data available. As

data collection techniques improve, replacement factors

advance through a series of progressively better estimates

until the "best" replacement factor is achieved. The various

types of replacement factors are listed below from least

preferred to most preferred order.

1. Engineering Estimate Replacement Factor— a predictionof annual replacement rate based on an engineeung estimate.Used when a brand new item enters the system.

2. Mean Family Replacement Factor--a prediction ofannual replacement factor used in conjunction with an engineer-ing estimate; however, it is modified to take into accountthe experienced annual failure rates of similar items.

3. Experienced Demand Replacement Factor— a computedreplacement factor based on total known item population andtotal annual system demand for the item.

4. Experienced Usage Replacement Factor— a computedreplacement factor based on total known item population andreported 3-M annual usage of the item.

5. Application Usage Replacement Factor--a computedreplacement factor based on total item population in aparticular application/equipment and reported 3-M annualusage of the item in that particular equipment.

Currently the Navy has advanced to the Experienced

Usage Replacement Factor stage in allowance computation.

EXHIBIT B

13

of the proper allowance of non-demand based insurance stocks;

however, it is appropriate at this time to regress and analyse

the first two elements of the FLSIP formula, population and

replacement factor.

Population Data . One of the data elements loaded into

the ICP technical files is the installed quantity of an

individual repair part in a particular equipment. This

quantity is determined by a review of the engineering drawings

covering that equipment and remains a constant. Several months

prior to COSAL computation, the number and application of all

equipments installed aboard the ship are sight validated by

shipboard personnel and reported to the ICPs for file updating.

The FLSIP computer program then extracts the number of equip-

ments installed on board the ship and summarizes the individual

part population of these equipments to arrive at the total

shipboard installed individual part population. The resulting

summation is a relatively straightforward element of the

allowance formula with a very low probability of error.

Replacement Factor . Demand has a direct influence on the

allowed quantity of a item through the item's replacement

factor. The function of the replacement factor is to provide

an estimate of the rate at which the item will be replaced

which, in turn, can be used to predict the expected usage or

demand that can be anticipated for the item. To achieve this

prediction with any degree of success, a system which provides

some demand characteristics about the item is preferred.

Prichard and Engle point out that a major advantage of a

14

system which attempts to project future demand by analysis

of past observations is that the necessary data (past demands)

are already available to the inventory manager or can be

developed to suit his particular requirements. Any stock

record keeping procedure which shows issues of material pro-

vides the manager with much of the data he requires. The

Navy has such a system in its Supply System, and using this

large accumulation of Fleet data as a basis can compute a

replacement factor and the estimated demand projection. How-

ever, in spite of all this data, this does not imply that

demand prediction is an easy task. Information received from

FMSO, Mechanicsburg , Pa. advises that only 10% of allowance

list items meet the requirement of one (1) demand or more in

90 days which attests to the unpredictability of shipboard

demand. For example, a FMSO analysis of 3M data indicated

that over 90% of all parts used in the Fleet for a period of

one year were demanded three (3) times or less. This random-

ness of demand results in the majority of items being clas-

sified as insurance rather than demand based. The only

decision remaining is whether or not to include them on the

allowance list. In addition to this low and sporatic usage

which increases the difficulty in predicting demand, experienced

inventory managers have learned that when dealing with

9Prichard, James W. , Engle, Robert H. , Modern InventoryManagement, John Wiley & Sons, 19 65, p. 308.

This data is submitted by Fleet activities under theNavy Maintenance and Material Management System to the NavyMaintenance Support Office, Mechanicsburg, Pa. It is accumu-lated and available to FSMO for supply system analysis studies.

15

voluminous inventory systems involving many people, a degree

of skepticism should be exercised concerning the absolute

validity of the data being reported. Melnitsky cautions

that inventory documents must be viewed as tools and nothing

else; they are by no means automatic tools, even with an

army of electronic record-keeping devices. In the final

analysis the value of records hinges entirely on the efficien-

cy with which they are used. Recognizing this, precautions

are taken during the annual review and update of replacement

factors to prevent the introduction of highly suspicious data

into the allowance computation formula. Controls are estab-

lished to screen and hold those items for manual review whose

percent change (either up or down) in the recomputed replace-

ment factor exceeds parameters established by NAVSUP (Navy

Supply Systems Command) . While no system which requires the

reporting and recording of hundreds of thousands of bits of

information by many diverse and disassociated personnel can

be considered 100% error free, the data utilized to compute

the replacement factor is, however, the "best" data currently

available and is considered substantially accurate.

Returning then to the insurance item determination portion

of the FLSIP program, three major influences now affect the

inclusion of the remaining items on the allowance list

the CNO Exclusion Criterion, the shipboard MEC system, and

the Technical Override.

Melnitsky, Benjamin, Management of IndustrialInventory, Canover-Mast Publications , Inc. , 19 58, p. 96.

16

CNO Exclusion Criterion . Since the expected quarterly

demand has already been computed, the allowance program next

checks to see if the expected demand is equal to or greater

than a minimum acceptable demand factor. OPNAV, in addition

to establishing general criteria for insurance items, has

also established a quantitative minimum demand rate for

insurance item candidates. This demand rate is known as the

CNO Exclusion Criterion and had been set at .15 demands per

annum (or .0375 per quarter) . In other words if an item had

an installed population of 100 and the annual demand was 15,

the item would pass the initial test to qualify it as an

insurance item. Another example would be in the case of an

item with an installed population of one (1) and an expected

life of 6 2/3 years. This is the mathematical equivalent to

a .15 expected annual demand rate. Since the exclusion

factor's precise setting has a direct affect on whether or

not an insurance candidate is allowed, NAVSUP directed FMSO

to conduct a sensitivity analysis of the effects on COSAL cost

and supply effectiveness created by varying the value of

the exclusion criterion. Eight models were formulated with

settings varying from 4.00 (expected demand of 1 unit in

h year) to .05 (expected demand of 1 unit in 20 years).

Significant findings were as follows:

a. As the value of the CNO Exclusion Criterion was

increased above the value of .15 (i.e., toward 4.00), the

range, cost, and effectiveness of the COSAL allowance de-

creased; and conversely, as the value was decreased from

.15 to .05, the range, cost, and effectiveness

17

of the COSAL allowance increased. However, at .05, the incre-

mental increase in effectiveness obtained for each additional

dollar invested to produce the increased range was not con-

sidered cost effective.

b. Analysis of the various cost versus effectiveness

curves produced by lowering or raising the exclusion criterion

indicated that the setting of .15 was sufficiently close to

«-• i12

optimal.

The curves produced from the various settings are dis-

played in Appendix B.

At the time of this writing, the Navy, in an effort to

conserve funds, has directed that the Exclusion Criterion

be increased from .15 to .25. Estimates by CNO indicate

the decision will result in an average repair part reduction

of 19% and a 12% reduction in COSAL repair part value. Further,

the potential reduction in ship's requisition effectiveness

from the new factor will vary among ship types but will not

exceed 5%. 5 The validity of these estimates remains to be

seen.

Shipboard MEC System . Those insurance candidates passing

the CNO Exclusion Criterion enter the next phase

12NAVSUP ltr SUP 04312/271 of 22 Dec. 1971; subj .

:

FLSIP COSAL criteria.

^Results of the complete study were published in FMSOReport #66 dtd Aug. 25, 1971; subj.: Evaluation of FLSIPCOSAL Criteria.

14CNO 261530Z Jan. 73; subj.: Shipboard Allowances ofSpares and Repair Parts.

15 Ibid

18

of the allowance program. This phase is totally dominated

by the shipboard MEC system now to be described.

Following the decision to implement the OPNAV directive

on item essentiality, an effort was launched to modify the

technical files at the various Navy ICPs (Inventory Control

Points) to include the data element of "mission essentiality".

The plan was relatively unsophisticated in that all equipment/

components aboard the active ships were to be coded in accord-

ance with OPNAV criteria as either Vital or Non-Vital. A

review, then, of each APL (Allowance Parts List) was con-

ducted by the technical commands to determine which parts

were Major or Minor to the operation of the equipment. The

MEC system, therefore, was designed as a two level system

(See Exhibit C)

.

In order to implement the military essentiality program,

a total of 2.5 million individual decisions were required

at the component to hull level (i.e., Vital or Non-Vital).

However, these decisions were required only for Hull, Mechani-

cal, Electrical and Ordinance equipments. In the Electronics

area, the Fleet requested that all components be designated

as Vital. NAVSHIPS (Naval Ships System Command) concurred

in this decision and ESO was directed to load its computer

(Weapon System) files accordingly. For the remaining equipment/

component MEC identification effort, the appropriate TYCOM

(Type Commander) or hardware systems command provided policy

guidance to individual ships governing the code assignments,

and in selected areas, actually made the assignments themselves.

19

The bulk of the identification effort, though, was performed

by the individual ships by appropriately annotating copies

of their COSAL index as to the Vital or Non-Vital status of

the equipments. The responsibility of the ICPs was:

(1) to provide each ship with copies of its COSAL index

for MEC annotation of the installed equipments.

(2) to review Vital/Non-Vital codes for consistency

across ships of the same class and return apparent discre-

pancies to the TYCOM for final resolution, and

(3) to load the MECs into the appropriate master files.

This program was completed for all active ships in February

1967, and is continuing for new construction programs.

However, as expressed by a senior official of the Navy Supply

Systems Command (NAVSUP) , once decisions are made at both

levels, they are seldom, if ever, subjected to review. There-

fore, for the active Fleet, the MEC program has been static

since its inception. ^

In the execution of this portion of the computer program,

the first determination made is whether or not the repair

part being considered is installed in a Vitally coded equipment,

If affirmative, the next determination made is whether or not

the repair part is coded Major to the successful operation of

the equipment. Those repair parts not coded Major are elimi-

nated as allowance items. In summary then, only those repair

parts meeting or exceeding the CNO Exclusion Criterion and

NAVSUP presentation of 22 September 1971 to CNOentitled"Military Essentially Program".

20

EXHIBIT C

Examples of Present Coding System

V - failure of the component would result in degradation

of the ship's mission.

NV - failure of the component would not result in degradation

of the ship's mission.

1 - major part whose failure would cause either total

degradation to the component or prevent the component

from meeting its mission requirements.

3 - minor parts whose failure would have negligible effect

on component operation.

Using both the component level and part level annotations,

an item (repair part) can be assigned to any one of four

catagories for allowance computation:

VI... vital equipment, major part

NV1. .non-vital equipment, major part

V3... vital equipment, minor part

NV3. .non-vital equipment, minor part

EXHIBIT C

21

coded Major to Vitally coded installed equipment are allowed

as insurance items.

However, as pointed out earlier in Chapter II, the MEC

system does not have the capability to rank repair parts in

their order of importance to the ship. Also, its effec -

tiveness to act even as a simple filtering devise to eliminate

all non-essential repair parts is, in effect, non-existent.

This is due to the extreme preponderence of the equipments

being coded Vital by the Fleet. To gain a more specific

insight into this problem a H,M,E&0 (Hull, Mechanical, Electri-

cal, and Ordnance ) COSAL index of one of the Navy's newest

class of Destroyer Escorts, the DE-1078 Class, was reviewed.

This particular class was selected because it is being built

by the same shipyard and will represent 18 ships in the Fleet,

each ship having an identical COSAL. The DE-1092 Cosal index

was used with the following statistics determined:

(1) number of APLs included 2528

(2) number of equipments covered by above APLs. 11 ,250

(3) number of equipments coded Vital 11,192

(4) number of equipments coded Non-Vital 58

(5) percentage of equipments coded Vital 99.5%

(6) percentage of equipments coded Non-Vital.... ,5%

Based on the above information, it can be readily observed

that the Fleet interpretation of the CNO policy encompasses

99.5% of all the equipment aboard these ships. The broad

CNO policy guidance regarding insurance item criteria and

its "loose" interpretation by the Fleet substantially

22

negates the effect of the shipboard MEC system.

Technical Override . The final major element comprising

the FLSIP allowance computation is the Technical Override.

The technical override is an alternative available to the

provisioner to override the FLSIP computation and ensure

a specific quantity of an item will be placed on the allow-

ance list. While it is a part of the FLSIP methodology/ it

does not in itself provide for a "computed" quantity of an

item per se. The technical override quantity is stipulated

by the cognizant hardware system command and is a subjective

type of decision applied to essential items where usage is

unpredictable and military prudence, maintenance, or pro-

curement considerations dictate carrying a minimum quantity

on board. Recent amplifying policy issued by OPNAV also

states that technical override items will only be permitted

under the following conditions:

(1) to ensure safety and preservation of life of

personnel

(2) where lack of the item will cause total degradation

] 7of a capability vital to a primary mission of the ship.

Studies are being initiated by NAVSUP to determine the extent

of use of the technical override, the cost implications

involved, and the supply effectiveness derived from use there-

from.

As can be seen from the preceeding discussion, each

17op cit CNO msg 261530Z Jan 73

23

of the five major elements in the FLSIP model plays an impor-

tant role in the allowance determination process. However,

the greatest weakness of the model appears to be the ship-

board MEC system. In order to pursue this further and to

develop a broader perspective of the essentiality concept,

several other MEC adaptations will be investigated in' the

following Chapter.

24

CHAPTER V

ADAPTATIONS OF THE ESSENTIALITY CONCEPT

The use of military essentiality has played an important

role in the development of allowances for support of various

systems. Four systems considered successful by the developers

are discussed below.

THE POLARIS MILITARY ESSENTIALITY CODING SYSTEM

The first major actual management use of MEC measurements

has been the application to the support of the Polaris wea-

pon system. This initially took the form of MEC input data

into the calculation of Polaris submarine allowance lists. °

With the development of the Polaris Missile System and the

unique type of operations of the SSBN (Fleet Balistic Missile

Submarine) whose patrol entails operating continuously sub-

merged without replenishment, the Navy was confronted with

providing an on board support program to ensure maximum

endurance and readiness within a self-sustaining environment.

While the cost constraint is always of great consideration,

the space constraint aboard a submarine takes on an increas-

ingly more critical role as compared to the larger surface

combatant. In order to optimize utilization of available

storage space, a system had to be devised which would screen

out spare parts of less importance and identify those which

18op cit, Soloman

25

were most essential to the operating readiness of the missile

system.

DATA ACCUMULATION

In accumulating the data required for the construction

of a MEC ranking system, three sets of questionnaires were

developed to determine effects of failure on the capability

of the Polaris weapons system. There was a different question-

aire for use at each of the three levels of mechanical oper-

ation: equipment, component and part. 19 The parts question-

naire (figure 1) related the dependence of the component

to the performance of the part. Parts were catagorized as

(1) major or minor and (2) installable during the patrol of

not installable during the patrol.

The component questionnaire (figure 2) catagorized the

criticality of a component to the performance of the equipment

in which it was installed. Considered were the degree of

degradation the component failure would have on the parent

equipment, the built in redundancy, if any, and the avail-

ibility of alternatives if the component failed.

The equipment questionnaire (figure 3) integrated the

third relationship of mechanical performance to mission read-

iness by catagorizing the effects of the failure of the parent

equipment to the overall mission capability of the Polaris

system. As with the component to equipment relationship, a

similar set of circumstances were evaluated concerning the

19 In other Chapters the terms equipment and component

are synonymously used. In the Polaris MEC system the equip-

ment is considered a higher assembly than a component.

26

failure of equipments to the Polaris mission the degree of

degradation of equipment failure on mission effectiveness,

the redundancy built into the system, and the alternatives

available if the equipment fails.

CODING STRUCTURE

As an end result, a septuplet classification structure

was developed for each part. For example, the highest rank-

ing part would bear the annotation 1 222 222 indicating wear-

ing part installed in a critical component having no redun-

dancy or alternatives and whose failure would prevent the

system from accomplishing its mission. Likewise, the anno-

tation 3 000 000 would indicate an allowance list candidate

of the lowest ranking. . .that is, a minor part of a component,

installed in a non-critical equipment with build-in redundancy

and other alternatives available. By using a matrix table

(see Appendix C) , this coding system is converted to a relative

mission essentiality ranking system which ranges from the

highest MEC code of 116 to the lowest of 0. For shipboard

calculation purposes however, only those spares which support

repair actions within the submarine's maintenance capability

are considered as allowance list candidates, and the lowest

MEC code applicable is 59. 20

^For a detailed summary of the Polaris MilitaryEssentiality System see Denicoff, Marvin, et al, "The PolarisMilitary Essentiality System" , Logistics Research ProjectSerial T-171 cf 24 July 1964 and Denicoff, Marvin; Fennell

,

Joseph; Haber , Sheldon E.; Marlow, W. H. ; Solomon, Henry,"A Polaris Logistics Model", Naval Research Logistics Quarterly ,

Vol. 11, No. 4, Dec. 1964, pp 259-272.

27

Figure 1

POLARIS MILITARY ESSENTIALITY QUESTIONNAIRE

WEARABLE INSTALLED PARTS

Identification: FSN or Piece No.

Application: CID or Drawinq No.

Number Installed

INSTALLABLE?

YES NO

COMPONENT

DEPENDENCE

(IF ONE UNIT FAILS)

MAJOR

MINOR

p = 1

p = 3

p = 2

p «= 4

•

v

28

Figure 2

POLARIS MILITARY ESSENTIALITY QUESTIONNAIRE

COMPONENTS

Identification: CID or Drawing No

Application: Service Application

Number Installed

Section

1

EQUIPMENT

EFFECT

(IF ALL FAIL)

Total Degradation

Partial Degradation

Minimal Degradation

Section

2

REDUNDANCY

(IF ONE FAILS)

.-i Du = Q

No Redundancy

Reduced Effectiveness

Equivalent Effectiveness v =

v-1

Section ALTERNATIVES

(IF ONE FAILS)

No Alternatives D

Equivalent Effectiveness w =

Reduced Effectiveness

W =

w = 1

5Q

Figure 3

POLARIS MILITARY ESSENTIALITY QUESTIONNAIRE

EQUIPMENTS

Identification: CTD or Drawing No.

Application: Service Application

Number Installed

Section

1

MISSION EFFECT

(IF ALL FAIL)

Total Degradation

Partial Degradation

Minimal Degradation

x = 2

x-0

Section

2

REDUNDANCY

(IF ONE FAILS)

No Redundancy y = 2

Reduced Effectiveness y = 1 I

Equivalent Effectiveness y =J

Section ALTERNATIVES No Alternatives DD

Equivalent Effectiveness z ={__

Reduced Effectiveness

z =

z =

30

MILITARY ESSENTIALITY IN AVIATION SUPPORT

Work in the essentiality concept was also accomplished in

the aviation support field. Studies were completed in the use

of military essentiality for identifying aviation repair part

requirements and selecting design changes for aviation equipment

modifications

.

Military Essentiality of Naval Aviation

Repair Parts

Motivated by the results of a study which concluded that

aviation repair parts usage exhibited similar characteristics

21of ship repair parts, the George Washington University Lo-

gistics Research Project and the Bureau of Supplies and Accounts

(now NAVSUP) in cooperation with the Navy Aviation Supply Office

initiated a study on military essentiality of Naval Aviation

repair parts. The Objectives of the study was to test the

feasibility and applicability of a military essentiality classi-

22fication for aviation repair parts.

In pursuing this objective, a questionnaire was developed

consisting of five questions. The first three questions were

21Denicoff, Marvin and Haver, Sheldon, "A Study of Usage

and Program Relationships for Aviation Repair Parts", TheGeorge Washington University, Logistics Research Project ,

Serial T-140/62, 7 August 1962.

22Denicoff, Marvin; Haber, Sheldon; & Varley, Thomas,"Military Essentiality of Naval Aviation Repair Parts",The George Washington University Logistics Research Project,Serial T-143, 4 October 1962

31

considered relatively more important than the other two and were

concerned with the degree of degradation incurred on the launch-

ing, landing and tactical mission of an aircraft as a result of

equipment failure. The remaining two were concerned with the

situation created by the absence of redundant equipment or

alternatives available for back-up protection of the primary

equipment. A second level of essentiality, the part-to-com-

ponent level, was also considered initially; however, since

the Logistics Research Project past experience in this area

indicated an extremely high percentage of repair parts were

always coded essential to the operation of equipments, for

purposes of this study it was assumed that all repair parts

would be considered equally essential. For all intensive

purposes then, the system developed was a one level essentiality

system measuring the affects of the successful operation of

equipments on three independent missions (i.e., the launch

mission, the landing mission and the tactical mission)

.

In response to each of the five questions, three answers

were possible 2, 1, or 0. The highest state of degradation

was coded 2 while the lowest was coded 0. The five responses

formed a quintuplet. These quintuplets were then correlated

to 36 MEC classifications with MEC 36 ranking the highest (see

Appendix D) . This system resulted in the establishment of an

essentiality precedence for components installed in the aircraft

and the identification of those components which were most

critical. However, in the final analysis of the study, two

major points were mentioned and were especially noteworthy:

32

(1) the determination of military worth of components to

the mission was by far the most important datum in determining

the military essentiality of repair parts.

(2) an order of precedence among missions was required

when multiple missions were involved. In this particular

case launching took precedence over landing which took prece-

dence over tactical mission. The logic behind this was that

if the aircraft could not be launched, the two other missions

were not possible, and if the aircraft could not land, it would

not be available for any other missions. Aborting one tacti-

cal mission was considered more satisfactory than completing

one tactical mission and losing the aircraft.

An Essentiality Index for Evaluating System

Design Proposals

The Naval Air Test Facility, Lakehurst, N.J. was confronted

with the challenge of how best to evaluate design changes for

incorporation in aircraft launch and recovery systems. Since

numerous design changes came under consideration, it became

extremely important that only those changes providing the

greatest contribution to the success of the mission be recom-

mended for incorporation. Ideally, if a method could be

formulated and used early in the design stage to evaluate the

potential benefits of the proposed change, those changes yielding

only nominal benefits could be eliminated from further con-

sideration. In an attempt to develop a formal method to estab-

lish the worth and priority for incorporating these changes

33

into the systems, NATF Lakehurst expanded upon the work done

in creating a military essentiality system for aviation repair

parts previously discussed. Basically this system entailed the

23evaluation of the status of five system characteristics:

(1) Launch Capability (Arrestment Capability for Landing

Systems)

(2) Subsystem Capability

(3) Availability

(4) Redundancy

(5) Alternatives

A scoring system based on three integers (2, 1, 0) was used

to rate the status of each of the five characteristics which

resulted in a quintuplet. A score of 2 was assigned to the

characteristic if the present equipment performance was con-

sidered to be unacceptable, a 1 was assigned if the present

equipment performance was definitely marginal or below design

requirements, and a was assigned to present equipment per-

formance if the present performance met all design or opera-

tional requirements. In essence then, a 2 meant there was a

need for an urgent design change to produce a significant

gain in performance; a 1 meant that the present system needs

to be upgraded; and a meant there was no need for a design

change. The quintuplets formed were then correlated to a

An extensive report on this study was published by NATF,Lakehurst, N.J. in report NATF-COS-2; subj : Analytical Proce-dure for Determination of Military Essentiality. Index dated16 July 1971, and prepared by Kraut, Willi K. and Ivanovic,Nicholas , P

.

34

Military Essentiality Index, with the highest MEC being 1.000

(see Appendix E) . The system was tested on an actual Service

Change proposal. The service change was evaluated by use of

a questionnaire which incorporated the above scoring system.

As a result, the subjective opinions of the evaluators were

translated into a quintuplet which correlated to a score in the

Military Essentiality Index. The decision maker was then able

to make an objective decision on whether or not to go forward

with the design change based on the ranking derived by the

index.

35

AN ARMY MEC APPLICAT ION

The U.S. Army, in an effort to provide a sounder basis

for decisions to improve supply support, initiated a study to

develop and test a systematic methodology for determining the

relative mission essentiality rankings of repair parts. ^ The

precedures used were based on the techniques developed by the

Navy in conjunction with the George Washington University Logis-

tics Research Project. The Baker Rough Terrain Forklift was

selected for the development effort.

Basic again to the information gathering effort was

the design of two questionnaires a component questionnaire

which covered the effects of component failure on mission, and

a part questionnaire which dealt with the effects of part failure

on the component. The system was constructed as a two level

system a part-to-component and component-to-mission.

The component questionnaire was divided into five cata-

gories. The first three related component failure effects

on lateral or horizontal movement, hydraulic lift, and crew

safety respectively. The remaining two were concerned with

built in redundancy or alternatives available upon component

failure. The parts questionnaire consisted of three ques-

tions. The first considered the effect of the part failure on

the component, while the second asked whether the part failure

U.S. Army Logistics Management Center Study #21-66,"Military Essentiality Coding", July 1968 by Brusco, Peter A.

and Rosenman, Bernard B.

36

could be compensated by a "jury-rigging" procedure, local manu-

facture, repair of the old part or use of a substitute. The

third question was not directly related to essentiality but was

a research question to determine the lowest authorized echelon

of maintenance for the part.

The coding structure for responses was similar to those

previously discussed. In the component questionnaire, a

2 represented total degradation of the component indicating a

complete mission failure; a 1 represented partial degradation

indicating a significant reduction in performance without

deadline; and a indicated little or no reduction in perfor-

mance. In the parts questionnaire the first two questions

which related to essentiality were simply "yes" or "no"

responses. The last provided the maintenance level.

The problem next facing the Army was the determination

of hov; best to establish a ranking system to reflect the

results of the data accumulated. The Army finally decided

upon a ranking system which was designated the Logical Ranking

Procedure. The term "Logical" was used in a Boolean sense

in that the procedure entailed performing Boolean arithmetic on

a string of "and" and "or" operations. It was different than

the MEC systems previously described in that it did not establish

a numerical ranking system per se, but divided the universe of

outcomes into an arbitrary set of classes. Four classes were

chosen for this particular study and were described by the study

as follows:

I - Not deadlined; little or no performance degradation.

37

II - Not deadlined; moderate performance degradation.

Ill - Not deadlined; severe performance degradation.

IV - Deadlined.

Since the outcomes from the component questionnaire formed a

quintuplet, the rules for assigning components to these classes

were as follows:

Class I - No redundancy, no alternatives and minimal de-

gradation for all mission effect questions; any answer for

mission effect questions and either redundancy with equilivent

effectiveness (00022, 22202, 22220, etc.).

Class II - Any answer for mission effect questions and one

of the following:

(a) Redundancy with reduced effectiveness and no alter-

natives .

(b) Alternatives with reduced effectiveness and no

redundancy.

(c) Both redundancy and alternatives with reduced effe< -

tiveness (10121, 10012, etc.).

Class III - No redundancy, no alternatives, and either

partial or minimal degradation for all mission effect questions

(11122, 11022, 00122, etc.).

Class IV - No redundancy, no alternatives, and total

degradation for at least one mission effect question (22222,

22022, 20022, etc. )

.

The procedure for interpreting the parts data was somewhat

different than that used for components since the format of

the response was different. First the following criteria

38

were established:

(1) A part could not be assigned to a higher class than its

parent component.

(2) If the parent component could not operate satisfacto-

rily given that the part failed and this failure could not be

compensated, the part was assigned to the same class as the

component.

(3) If the parent component could not operate satisfacto-

rily given that the part failed and this failure could be

compensated, the part was assigned to a class one lower than the

component.

(4) If the parent component could operate satisfactorily

given that the part failed, the part was assigned to the

lowest essentiality class (I)

.

Operating within the criteria established, a matrix was designed

to convert the parts responses into a numerical value as fol-

lows :

Compensation Possible?Yes No

Yes 2

No 3 4SatisfactoryOperation?

These numerical values were then combined with the Essentiality

Class of the parent component to determine the Essentiality Class

of the part in accordance with the following rules:

39

Component Class Part Score Part Class

I 1, 2, 3, 4 I

II 1, 2, 3 I

4 II

III 1, 2 I

3 II

4 III

IV 1, 2 I

3 III

4 IV

Using these procedures, the 62 components and 2092 part

applications in the Baker Rough Terrain Forklift were assigned

to a component or part essentiality class based on responses

to both set of questions. The higher of these two classes

was finally taken as the essentiality class of the part. The

Army felt that while consistency of parts ratings was not as

good, it was improved considerably by assigning parts to t :ie

same Military Essentiality Classes as their parent compont it.

This caused some migration of parts to higher Military Es enti-

ality Classes but the majority of parts affected were low in

cost and it was felt that the effect on logistic decisions

would not be significant.

40

CHAPTER VI

ALTERNATIVES FOR A REVISED SHIPBOARD MEC SYSTEM

The preceding Chapters have presented information into

the background of the essentiality concept, problems and

deficiencies of the present shipboard MEC system, and descrip-

tions of other adaptations of military essentiality to defense

systems. Based on this information, this Chapter presents

several alternatives available to the Navy to change the pre-

sent shipboard MEC system. However, prior to discussing any

specific alternatives, some general comments will first be

noted.

Crucial to any revisions to the present MEC system is the

present OPNAV policy guidance concerning the multiple insurance

support catagories, (i.e., equipments vital to the prime mission,

the safety of personnel, and the welfare of personnel) . Th 3

presents a significant obstacle, because as shown in the ca b

of the DE-1092, 99.5% of all equipments on board have been nter-

preted to fall within these catagories. A second major issue is

the multiple compatant roles in which a ship is expected to per-

form. Again using the DE-1092 as an example, this ship contains

sonar and ASROC for anti-submarine warfare (ASW) ,5 "54 guns for

shore bombardment, and air defense radars to be used in con-

junction with the guns for anti-air warfare (AAW) . The present

MEC system includes all these combatant roles within the prime

mission.

41

In both of these two situations, there is a need to

delineate the relative importance among these multiple relation-

ships. A similar situation was recognized in the development

effort of the MEC system for Aviation Repair Parts. To make

that system successful, a precedence had to be established

among the launch, landing and tactical mission relationships.

A third point for consideration is the role played by

the present part-to-component level of the shipboard MEC

system. Both the Army study and the Aviation Repair Part

study emphasized the importance of the component ranking over

that of the individual repair part. In consonance with this,

shipboard repair part essentiality classifications are based

on the review of the engineering drawings which implies a

high degree of accuracy. Since it was pointed out earlier

that over 97% of all repair parts have been designated major

to equipment operation, the possibility exists that this If 'el

may not be crucial to a revised shipboard MEC system.

A final point for consideration is the simplicity of

the present MEC system. While simplicity is a highly desir-

able feature, all four systems examined in Chapter V could

not be considered overtly simple. Based on the investigation

conducted into these systems, it does not appear that a very

simple essentiality system for shipboard use is feasible.

With the above particulars in mind, several plausible

42

alternatives for shipboard MEC revisions are presented below.

Alternative A

Assumptions

:

(1) All policies of the present system remain the same,

except that the phrase "equipments vital to prime mission" in

OPNAV policy on insurance support be changed to "equipments

vital to combat missions".

(2) All parts on the allowance list have equal part-to-

component essentiality.

Procedure . Under the above assumptions , a method for

improving the decision making process through use of MEC is

available with some minor modifications to the present FLSIP

model and the ICP technical files. The COSAL "B" Index is a

listing of installed equipments sequenced by service application

(see Appendix F) . The service application simply designates ;

the shipboard intra-system in which the equipment is instal ,ed.

A coding structure could be constructed to identify each se :-

vice application to fall within one of the three authorize'

insurance support catagories (i.e. "C" for combat missions,

"S" for safety of personnel, and "W" for welfare of personnel).

A fourth catagory of "0" for other could also be assigned as

a catch-all catagory. Since the equipment's APL number is

already linked to service application, and since the part's

FSN is likewise linked to the APL number, a computer sort could

be designed to catagorize all repair parts on the present

43

allowance list into one of the four catagories . This would

at least provide the decision maker with some indication of

what repair parts are included in each catagory thereby

distinguishing between repair parts in support of main pro-

pulsion equipment (combat missions catagory) and laundry

equipment (welfare of personnel catagory) . Since all part-

to-component essentiality is assumed to be equal, funding

cutbacks could be applied to the various catagories of support

by subjectively cutting out specified percentages of insurance

repair parts in each catagory until the necessary dollar amount

is reached. While not the best system, it does present an

improvement to the present system of simply increasing the

CNO Exclusion Criterion and arbitrarily reducing the allowance

list across all four catagories. The disadvantages of this

system is the lack of an essentiality ranking system and the

requirement for a manual subjective review to determine which

parts are to be deleted from the allowance.

Alternative B

Assumptions

:

(.1) The phrase "equipment vital to prime mission" in OPNAV

policy on insurance support be changed to "equipment vital to

combat missions".

(2) OPNAV establishes a precedence to the multiple

insurance support catagories as follows: (a) combat missions,

(b) safety of personnel, (c) welfare of personnel, (d) other

catagories

.

(3) Present policy of protecting electronics from a MEC

system be maintained.

44

(4) All parts have equal part-to-component essentiality.

Procedure

.

The second feasible alternative is primarily

dependent upon assumption (2). As recognized in the Aviation

Repair Parts Study, a ranking structure could not be con-

structed unless the multiple functions (or missions) were

ranked in order of precedence. Likewise then, the insurance

support catagories designated by OPNAV must be ranked. Under

these assumptions, the following system is proposed as alterna-

tive B.

Based on the findings of the Aviation Repair Part Study,

as supplemented by the Army Essentiality Study, the most

important datum in essentiality measurement is the relation-

ship between component-to-mission; therefore, the evaluation

of this relationship must be determined first. A COSAL Index

for annotation and a coding system designed to gather the

following information is sufficient:

This equipment is used for the following function:Code

Combat missions 1

Safety of personnel 2

Welfare of personnel 1

Other catagories

Failure of this equipment would have the following

effect on the related function specified above:Code

Total degradation; function cannotbe accomplished . 2

Partial degradation; function can bepartially accomplished 1

No degradation; function can beaccomplished with redundant equipmentor alternatives

45

This coding system would result in a system similar to that

of the Army, but in a two digit classification in the fol-

lowing priority sequence:

32 - combat missions, total degradation22 - safety of personnel, total degradation12 - welfare of personnel, total degradation02 - other catagories, total degradation31 - combat missions, partial degradation21 - safety of personnel, partial degradation11 - welfare of personnel, partial degradation01 - other catagories, partial degradation30 - combat missions, no degradation20 - safety of personnel, no degradation10 - welfare of personnel, no degradation00 - other catagories, no degradation

Since it is assumed repair parts have equal part-to-component

essentiality, the repair parts on the allowance list would be

assigned the essentiality classification associated with the

parent equipment. Repair parts associated to multiple classi-

fications would take on the highest classification of those

applicable. Again a sorting routine could be established to

display the repair parts into an essentiality classificati n

sequence. This alternative presents a marked advantage ov r

the present system and is a partial step towards ranking

repair parts for objective decision making. The main disad-

vantages of this system entails the introduction of a

moderately sophisticated system which requires greater time

and an increased computer reprogramming effort. Also, the

end result will still not provide a totally integrated repair

part ranking system.

46

Alternative C

Assumptions

:

(1) OPNAV establishes a precedence to the multiple

insurance support catagories as follows: (a) combat missions,

(b) safety of personnel, (c) welfare of personnel, (d) other

catagories

.

(2) All Hull, Mechanical, Electrical, Ordnance, and

Electronic equipments are included in the system.

(3) All parts essentiality is not equal and the present

concept of Major (code 1) and Minor (code 3) designations is

maintained, however, the numeric code designating a Minor

part will be changed to zero (0) vice 3.

Procedure . Alternative C involves a totally integrated

shipboard essentiality measurement system with a higher degree

of sophistication. While not beyond the state-of-the-art, the

system could be designed to take advantage of all the techniques

and experience gained in the development of all the MEC systems

described in Chapter V. Under assumption (1) , the relative

importance of the multiple insurance support catagories has

already been designated, thereby establishing the ranking at

the first level. Information at the component-to-insurance

support catagory level could be gathered using a similar cod-

ing structure outlined in Alternative B. At the part-to-

component level the importance of the installed repair part

to the operation of the component has already been established.

However, since most ships have en board manufacturing or

fabricating capabilities, an added informational element

47

regarding the part should be established. As in the Army study,

a second determination should be made regarding whether part

failure could be compensated by a "jury-rigging" procedure,

on board manufacture, repair of the old part, or use of a

substitute. This response would be answered "no" or "yes"

and could be coded "1" and "0" respectively. An example of

the coding structure which would result is as follows:

.:...

combat mission insurance support catagorypartial degradation of equipmentpart is majorpart cannot be manufactured on board, etc.

The most critical score in the coding structure would be:

3211 - combat missions related, total degradation,part is major, and part cannot be acquiredon board.

Conversely, the least critical score would be 0000.

Using the above coding structure, a MEC Index could be

constructed similar to those in the Polaris and Aviation

Essentiality studies. The scores resulting from above

evaluation could then be correlated to the MEC Index for rank-

ing purposes'.

The advantage this system provides is a MEC system which

includes all equipments aboard the ship. The end result is

a reasonable ranking system which provides the decision

maker greater insight into the consequences of funding cut-

backs for shipboard support. Disadvantages include a large

data gathering effort and major reprogramming and file loading

efforts at the ICPs. In addition, a much greater degree of

48

sophistication over that in the present system is introduced;

therefore, a requirement is created to expend additional

resources to train current personnel in the new sophisticated

system.

49

CHAPTER VII

RECOMMENDATIONS AND SUGGESTED TOPICS FOR

FURTHER STUDY

RECOMMENDATIONS

The alternatives presented in Chapter VI are in no way

all inclusive of the modifications which can be made to improve

the present shipboard MEC system. They are, however, repre-

sentative of the various degrees to which the MEC concept can

be applied. As the degree of sophistication increases though,

implementation costs grow in the direct proportion. In

austere times, such as the Navy is presently experiencing,

large outlays of funds for redevelopment efforts may be diffi-

cult to acquire, although justification for a new shipboard

MEC system is almost self-evident. Therefore, on the basis

of this study and considering the paucity of resources, it is

recommended that the Navy immediately initiate action to

expand the present MEC system to encompass the procedures

outlined in Alternative A as a short term goal. This can be

accomplished with minimum effort and provide the decision

maker the opportunity for a moderate appraisal of the dis-

tribution of his allowance support in order to make a better

subjective decision on how best to distribute any potential

funding cutbacks in ship outfitting funds. As a long range

goal it is recommeded that the Navy further investigate the

50

alternatives presented and progressively advance to Alter-

native C by taking an intermediary action towards imple-

mentation of Alternative B. The resource requirement impact

of this action would be less drastic and would enable the

personnel engaged in allowance preparation to systematically

advance up the learning curve toward a sophisticated system.

Implementation of these recommendations would provide the

Navy with the much needed improvement in the adaption of the

Military Essentiality Concept to shipboard allowance deter-

mination.

SUGGESTED TOPICS FOR FURTHER STUDY

Although the three alternatives presented in this study

are basic to applying the essentiality concept, two other

variations are recommended for further investigation:

Recommendation 1: Since a ship is composed of many intra-

related systems, further investigation in incorporating a

component-to-system level between the component and the

insurance support catagory should be conducted. This system

would add a new relationship to the coding structure similar

to that in the Polaris system. The resulting four levels

would measure the effects of (1) part-to-component , (2) com-

ponent-to-system, (3) system-to-insurance support catagory,

and (4) precedence within insurance support catagory.

Recommendation 2: Further refinement of the various

part-to-component-to-system-to-combat missions relationships

should be investigated with the possibility of establishing

a support priority sequence for the various combatant roles

51

in which a ship is expected to perform (i.e., ASW, AAW, Shore

Bombardment, etc.). This may provide some insight into a

maldistribution of assets if some ships are overstocked to

support a combatant role not as important to them as it is to

others

.

52

CHAPTER VIII

SUMMARY AND CONCLUSIONS

The design and successful implementation of a Military

Essentiality Coding System is by no means an easy task. Com-

plicating the matter even more for ships is the fact that

modern warships are amazingly complex combinations of com-

batant, propulsion, command and control, communications, and

life support systems. In addition, repair part usage for

shipboard equipment is known to exhibit very sporatic and

extremely random demand. This necessitates the stocking of

a large range of insurance items to ensure high equipment

availability. But in spite of all these complexities, logis-

ticians have refined the shipboard allowance determination

process to a reasonable degree of success. However, in times

of budgetary cutbacks and austere funding levels, the pres at

system of allowance determination is extremely deficient i

a methodology to reduce stock levels of repair parts of

relatively lesser importance to the ship. This deficiency

lies in the fact that the present shipboard MEC system is

not responsive to these constraining actions. Accentuating

this situation is the broad policy guidance provided by CNO

in defining the catagories of equipment for which insurance

item support is authorized. As a result, the greatest major-

ity of installed shipboard equipments are designated vital

to the successful accomplishment of the ship's prime mission

53

or the safety and welfare of the crew which completely negates

the effectiveness of the present shipboard MEC system.

The FLSIP methodology is a logical approach to shipboard

allowance computation. Consequently, once the decision

maker is satisfied that the CNO Exclusion Criterion being used

in the FLSIP formula is optimal, cutbacks in support dollars

should then be applied in accordance with an essentiality

concept. Those repair parts relatively least essential to

the ship should be deleted first until the stipulated dollar

reduction is achieved.

Past studies in the concept of essentiality measurements

have shown that successful essentiality measurement systems

are feasible. Using the techniques developed in these studies,

the shipboard allowance determination process can be improved

and a MEC system developed which will aid the decision maker

in his challenge to maximize support effectiveness under

increasingly more stringent cost constraints. To partially

offset the initial impact of a large requirement for resources

to revise the present shipboard MEC system, yet still strive

toward the goal of improvement, a systematic evolution from

a slightly more sophisticated MEC revision to a highly

sophisticated MEC revision appears plausible. In any event,

a revision to the present shipboard MEC system is becoming

increasingly more important since the requirement still exists

to maintain a highly effective seagoing fighting force in a

national environment imposing more and more funding constraints

upon the Department of Defense.

54

BIBLIOGRAPHY

1. Brewin, Robert L. , "A Review of the Concept of MilitaryWorth and Its Application in Military Decision Making",Thesis, Navy Postgraduate School, 1964.

2. Brusco, Peter A. and Rosenman, Bernard B. , "MilitaryEssentiality Coding" , U.S. ARMY Logistics ManagementCenter Study, Number 21-66 of July 1968.

3. Clark, Shelby V.T. , "An Inquery Into the ProblemsAssociated with Provisioning and Allowance List Preparationfor FBM Submarines", Thesis, Navy Postgraduate School, 1966.

4. Denicoff, Marvin; Fennell, Joseph; Haber, Sheldon E.;Marlow, W.H.; Segel, Frank W. ; & Soloman, Henry, "ThePolaris Military Essentiality System" , The George Washi ngtonUniversity Logistics Research Project, Serial T-171 of24 July 1964.

5. Denicoff, Marvin; Haber, Sheldon; and Varley, Thomas C.

,

"Military Essentiality of Naval Aviation Repair Parts",The George Washington University Logistics Research Project,Serial T-143 of 4 Oct 1962.

6. Denicoff, Marvin; Fennell, Joseph; and Soloman, Henry,"Summary of a Method for Determining the Military Worth ofSpare Parts", Naval Research Logistics Quarterly, Vol. 7,No. 3, Sept. 1960.

7. Denicoff, Marvin and Soloman, Henry, "Simulations ofAlternative Allowance List Policies", Naval ResearchLogistics Quarterly , Vol. 7, No. 2, June 1960.

8. Department of the Navy, Fleet Material Support OfficeReport #66, "Evaluation of FLSIP COSAL Criteria" of26 Aug. 1972.

9. Department of the Navy, Ships Parts Control CenterAlrand Report #16, "Essentiality", of 30 June 1960.

10. Eilberg, James S., "MEC Goes to Sea", United StatesNaval Institute Proceedings , Vol. 89, No. 11, November 1963.

11. Guttman, Irwin and Wilks, S.S., Introductory EngineeringStatistics , John Wiley & Sons, Inc., 1965.

12. Jablonski, Felix J. and Rixey , Charles W. , "MilitaryEssentiality in Inventory Management", Thesis, Navy Post-graduate School, 1961.

55

13. Karr, H. W. , "A Method of Estimating Spare PartEssentiality" , Naval Research Logistics Quarterly ,

Vol. 5, No. 1, March 1958.

14. Kraut, Willi K. and Ivanovic , Nichalos P., "AnalyticalProcedure for Determination of Military Essentiality Index"

,

Naval Air Test Facility, Lakehurst, N.J. Report NATF-COS-2of 16 July 1971.

15. Mar low, W.H. "Some Accomplishments of Logistics Research"Naval Research Logistics Quarterly, Vol. 7, 19 60.

16. Melnitsky, Benjamin, Management of Industrial Inventory,Canover-Mast Publications, Inc. 1958.

17. Meyers, Walter T., LCDR, SC , USN, "Military EssentialityCoding", Supply Corps Newsletter, September 1963.

18. Miller, Eric H. "A Review of Initial Provisioning Policies,Procedures, and Principles Applicable to the Department ofthe Navy", The sis, Navy Postgraduate School , 1965.

19. OPNAV INST 4441.12 of 27 Aug 1964; subj . : Supply Supportof the Operating Forces.

20. Prichard, James W. and Eagle, Robert H. , Modern InventoryManagement, John Wiley & Sons, Inc., 1965.

21. Riley, Frederick J., Jr., "Combat Essentiality Measure-ments: A Means of Determining Repair Part Protection Levels",Society of Logistic Engineers Proceedings of the SeventhAnnual Convention , August 21-23, 1972, Long Beach, Calif.

22. Soloman, Henry, "The Determination and Use of MilitaryWorth Measurements for Inventory Systems" , Naval ResearchLogistics Quarterly, Vo 1 . 7 , 1960.

23. Soloman, Henry, "An Exposition on the Development andApplication of Military Essentiality Measurements" , TheGeorge Washington University Logistics Research Project,Serial T-198 of 15 June 1967.

24. SPCC INST 4400. 30A of 27 Jan. 1971; subj.: Provisioning;policies, procedures and responsibilities.

25. SSPO INST P4423.27A of 22 May 1967; subj: RepairParts Support Requirements for Special Projects Office FleetBalistic Missile Equipments.

56

APPENDIX A

DEFINITIONS

57

DEFINITIONS

1. APL (Allowance Parts List) - a technical document whichidentifies all parts installed in an equipment. It providesa brief description of the equipment, the operating charac-teristics, and the quantity of each part installed.

2. COSAL (Coordinated Shipboard Allowance List) - a com-puterized publication which identifies all equipments andequipment applications aboard a ship, provides copies of allapplicable APLs, and establishes an allowance quantity ofrepair parts.

3. COSAL "A" INDEX - A section of the COSAL, Section 1,Part A, which provides an alphebetical listing of equipmentsin equipment nomenclature sequence.

4. COSAL "B" INDEX - A section of the COSAL, Section 1,Part B, which provTdes an alphebetical listing of equipmentsin service application sequence.

5. Demand Based Item - An item with an expected usage ofone TT) demand or more in 9 days.

6. ESQ (Navy Electronics Supply Office ) - a Navy inventorycontrol point responsible for the supply management of Navyelectronic equipments and associated repair parts.

7. FMSO (Fleet Material Support Office) - A field activityof the Navy Supply Systems Command that provides computersystems analysis, computer programming, and operationsanalysis support.

8. FSN (Federal Stock Number) - An eleven digit number in aprescribed format to identify repair parts. This system isuniform throughout the Federal government.

9. Hardware Systems Commands - An expression used to cata-gorize the Navy System Commands responsible for technicalsupport of Navy equipments and weapon systems.

10. Insurance Item - A repair part for which there may be anunpredictable demand and, if not immediately available fromstock, would have an adverse affect on an equipment vitalto the ship. Demands for these items are not sufficient toclassify them as demand based items.

11. ICP (Inventory Control Point) - An organizational unit with-in the Navy Supply System responsible for the supply manage-ment of a group of items, either within the Navy or for theDepartment of Defense as a whole.

58

12. Maintenance Code - A code assigned to an equipmentdesignating the lowest maintenance level within the Navyauthorized to repair the equipment.

13. MEC (Military Essentiality Code) - A code, usually numeric,assigned to each repair part to establish a relative rankingof importance.

14. Military Essentiality - a support concept which recognizesthe fact that certain items are more important to the effectiveoperation of equipments than others. Only those items essentialto the operation of the equipment are stocked to ensure max-imum availability.

15. Minimum Replacement Unit - The minimum quantity of arepair part normally used for replacement during a maintenanceaction (i.e., 8 spark plugs for eight cylinder engine).

16. MSO (Maintenance Support Office) - The command within theNavy responsible for the accumulation and promulgation ofmaintenance usage data derived from the Navy Maintenance andMaterial Management System (3-M System)

.

17. Planned Maintenance Requirement - A specific quantityof a repair part whose replacement within 90 days is knownahead of time as a result of a scheduled preventativemaintenance action.

18. Servic e Application - A description of the system aboardship in which a particular equipment is installed.

19. • SNSL (Stock Number Sequence List) - A listing in theCOSAL, Part III in FSN sequence providing the allowancequantity and applicable parent APL number.

20. SPCC (Ships Parts Control Center) - A Navy inventorycontrol point responsible for the supply management of al.1

shipboard Hull, Electrical, Mechanical, and Ordnanceequipments and repair parts.

21. SSPO (Strategic Systems Project Office) - The commandwithin the Navy responsible for the Polaris and PoisidenMissile systems.

59

APPENDIX B

COST vs. EFFECTIVENESS GRAPHS USING

VARIOUS CNO EXCLUSION CRITERION

60

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POLARIS ESSENTIALITY MATRIX

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APPENDIX D

NAVAL AVIATION REPAIR PARTS STUDY

ESSENTIALITY MATRIX

69

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APPENDIX E

MISSION ESSENTIALITY INDEX FOR

SYSTEM DESIGN PROPOSALS

71

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7^

INITIAL DISTRIBUTION LIST

No Copies1. Library

U. S. Naval Postgraduate School 2

Monterey, Calif. 93940

2. Defense Documentation CenterCameron Station 2

Alexandria, Va. 22314

3. LCDR E. A. Zabrycki, SC , USNDepartment of Operations Research and 1

Administrative ScienceU.S. Naval Postgraduate SchoolMonterey, Calif. 93940

4. Professor J. P. HynesDepartment of Operations Research and 1

Administrative ScienceU.S. Naval Postgraduate SchoolMonterey, Calif. 93940

5. Mr. Jerry GumenickNavy Supply Systems Command (SUP 04 312) 1

Washington, D.C. 20390

6. LCDR J. A. Matalavage, SC USN 1

SMC 2553U.S. Naval Postgraduate SchoolMonterey, Calif. 93940

7. Professor J. R. Borsting, Code 55Naval Postgraduate School 1

Monterey, Calif. 93940

8. Capt. C. W. Rixey, SC, USNShips Parts Control Center (Code 790) 1

Mechanicsburg, Pa. 17055

75

DOCUMENT CONTROL DATA -R&D(Security classification ol title, body ol abstract and indexing ennotation must be entered when the overall report Is classllied)

i Gin A Ti n G activity (Corporate author)

ival Postgraduate School>nterey, California 93940

21. REPORT SECURITY CLASSIFICATION

Unclassi fipri2b. CROUP

PORT TITLE

Review of Shipboard Allowance Computation and the UseMilitary Essentiality Coding

ISC RIP TI VE NOTES (Type ol report and.inc lus ivr dates)

ster's Thesis; March 1973I TMORiS) (First name, middle initial, laat name)

seph Anthony Matalavage

POR T D A TE

rch 19737«. TOTAL NO. OF PACES

857b. NO. OF REFS

2ZlONTRACT OR GRANT NO.

ROJEC T NO.

9a. ORIGINATOR'S REPORT NUMBER(S)

9b. OTHER REPORT NOIS) (Any other number* dial i,\cy ba acalgnedthlt report)

STRIBUTION STATEMENT

proved for public release; distribution unlimited.

UPPLEMENTARY NOTES 12. SPONSORING MILITARY ACTIVITY

Naval Postgraduate SchoolMonterey, California 93940

SSTR AC T

Currently the Navy is faced with one of its most severedgetary constraints in recent times. All programs and policiese continually subject to review to determine if greater improve-nt in dollar utilization can be achieved. Of growina concernNavy management is the large amount of funds invested in ship-ard inventories of repair parts. While the computation ofipboard allowance lists is now somewhat routine, further refinementdesirable to ensure maximum cost effectiveness. In this regard,

e shipboard allowance list computation procedures are described ande concept and objectives of military essentiality coding arevestigated. The application of military essentiality coding ande inherent problems created within the present shipboard system arescussed. In conclusion, the author recommends some variations toe present shipboard military essentiality system.

)F0RMI NOV 68

01 01 -607-681 1

1473 (PAGE 1)

76 Security ClnndcutionA-31408

DOCUMENT CONTROL DATA -R&D{Security classification ol title, body of abstract and indexing annotation must be entered when the overall report Is classllied)

riGinatinG AC Tl VI T Y (Corporate author) \za. REPORT SECURITY CLASSIFICATION

aval Postgraduate School[onterey, California 93940

Unci a RHi fi pri2b. CROUP

1EPORT TITLE

.Review of Shipboard Allowance Computation and the Use

f Military Essentiality CodingDESCRIPTIVE NOTES (Type ol report and,inclua ive dates)

;aster's Thesis; March 1973iu T moRisi (hirst name, middle initial, laat name)

oseph Anthony Matalavage

IEPOR T D A TE

arch 1973

T. TOTAL NO. OF PAGES

85

7b. NO. OF REFS

25.CONTRACT OR GRANT NO.

PROJEC T NO.

9a. ORIGINATOR'S REPORT NUMBER(S)

9b. OTHER REPORT NOI1) (Any other numbers that may be assignedthis report)

DISTRIBUTION STATEMENT

pproved for public release; distribution unlimited.

SUPPLEMENTARY NOTES

ASSTR AC T

12- SPONSORING MILITARY ACTIVITY

Naval Postgraduate SchoolMonterey, California 93940

Currently the Navy is faced with one of its most severeudgetary constraints in recent times. All programs and policiesre continually subject to review to determine if greater improve-ent in dollar utilization can be achieved. Of growing concerno Navy management is the large amount of funds invested in ship-oard inventories of repair parts. While the computation ofhipboard allowance lists is now somewhat routine, further refinements desirable to ensure maximum cost effectiveness. In this regard,he shipboard allowance list computation procedures are described andhe concept and objectives of military essentiality coding arenvestigated. The application of military essentiality coding andhe inherent problems created within the present shipboard system areiscussed. In conclusion, the author recommends some variations tohe present shipboard military essentiality system.

DFORM< NOV 68

M OtOI -807-681 I

1473 (PAGE M76 Security Classification

A-31408

Security Classification

key wo not

Allowance ComputationMilitary WorthMilitary Essentiality

DD, f° R"..t473 < BA™>

i/N 0101 -807-6S2 1

OMREMSMtW

77 Security Classification a - 3 I 409

U4051Thesi s

M369 Mata lavage

c.l A review of shipboardallowance computationand the use of militaryessentiality coding.

thesM369

A review of shipboard allowance computat

II II

nil 1 1 ii ii III

MM II II '

I

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