Aviation Logistics in U.S. Pacific Command: A Cost-Based Analysis and Comparative Advantage to Commercial Shipment

Abstract

This project identifies current sources of cost savings and cost avoidance generated through Army foreign military sales (FMS). Using a comparative high-low case-study approach, a high-demand volume case and a low-demand volume case were selected in major weapons categories. The cases were analyzed on an internal basis to determine cost savings, cost avoidance, and public value. Once the cases were analyzed and compared against each other, advantages or trends in cost savings, cost avoidance, and public value became apparent. Upon completion of our analysis, we determined that cost savings were usually gained from reduced system unit costs due to higher economic order quantities, reduced overhead costs per unit, reduced unit costs resulting from manufacturing learning curves, and additional costs were avoided by reducing production lines gaps. Furthermore, we determined that the Army's FMS strategy needs improvement in order to take full advantage of these sources of cost savings and cost avoidance.