Cost Effectiveness Analysis for Capitalizing Unit-Level Ship Inventories

Abstract

Some U.S. Navy ships operate under Navy Working Capital Fund (NWCF) while others are mission funded. This thesis evaluates the feasibility, cost implications, and operational impacts of transitioning Navy ship inventories from mission-funds to the Navy Working Capital Fund. This study builds upon prior research by expanding the data set and incorporating updated logistics performance metrics. Using a Cost Effectiveness Analysis via the Multi-Objective Decision-Making framework, the study analyzes 30 months of supply effectiveness data, inventory valuation, and manning data. In addition to quantitative analysis, this thesis also incorporates qualitative analysis of procedural, policy, and cultural factors that influence transition feasibility. The analysis includes a cost estimate for inventory capitalization, an assessment of system compatibility, and a phased implementation aligned with the Optimized Fleet Response Plan. The findings show that NWCF platforms consistently outperformed mission-funded counterparts in terms of supply responsiveness and funding availability, particularly during periods of high operational demand. The projected annual transition cost was modest, with no major system or procurement disruptions identified. By combining quantitative and qualitative insights, this study provides a data-driven framework for Navy leadership to evaluate a potential enterprise-wide transition of unit-level ship inventory funding to the NWCF model.