'IC

1 -AIV9. 4-g 4-Du4* I-5 CWWAW R~ftRT till~~aE 30 -S T IC P'IC NVIC% %>..A~ 4 V ';..4* -A~0 . *t~ V ..\~.4 A',~~' \-. ~. A. , '4'4 '4 -"a.' .4. 0~ 4.,.-'.'0 4"4'~'' ..~-..4-nIl ..~ k\ -\. ,. --~ .. ' tA'.''.~ '.~~ '. 'A '4 .4 *i.,:4044 4~g5..4"'SA'- ~ ~iq ~~~Ufl~CLAIP1tIV t~ A ..-"'.~, ,~ ., t<'A\V.'Z'r WuPJ. %.ttZ~W~ ~ .~~ (''~--S 4<'4:~"' 4 4,.0> r$~Q'a ~~c'a o.~ ~ A'-~.t-. -.\''~-'i '3'.4the iIews~ ornntenbjahd/or ftadiuys tZ~Mne4 1W tt 3t0p@t ~ thOsre ~Thutfl6r'~fld th a~ #t't be ton~trua4 '~ ~otficti Qep4r "Iefl 4pbs1ti~ pe~flc% or 4~1s1on; unless ~o 4esf*bateat~ ther dqcwuent~ttor~.44% .. , .. -4 .4 .4 '4..'1' -, ' -, ..j~ A, A "~ ~.)

2 3 .S'4 'c .4 AC -) '-',,*~ ., 1 ' ..4 ..- ' -. 4 .4 ,1 .'/4"IS 4- 1/4C.'14 1 /141I9/,// ' ,'4 1- -IIf---.. -BEST AVAt~2LE COPY.. -', C Jrk-SI) CLASSIFICATION OF THIS PAGE ( Data Entered)REPORT DOCUMENTATION PAGE READ INSTRUCTIONSREPORTDOCUMENTATIONPAGEBEFOR E COMPLETING FORM1. REPORT NUMBER 2. GOVT ACCESSION NO. 3. RECIPIENT'S CATALOG NUMBER4. TITLE (and Subtitle) 5. TYPE OF REPORT & PERIOD COVEREDD etermination of Maintenance Expenditure Limits Technical Reportfor Depot Reparable Items 6. PERFORMING ORG. REPORT NUMBERLSO Project 0657. AUTHOR(*) 8. CONTRACT OR GRANT NUMBER(*)Uldis Rex Poskus9. PERFORMING ORGANIZATION NAME AND ADDRESS 10.

3 PROGRAM ELEMENT, PROJECT. TASKAREA & WORK UNIT NUMBERS oDirector, USA Materiel Systems Analysis Activity, : AMXSY-LLSO, Fort Lee, VA 23801-604611. CONTROLLING OFF:CE NAME AND ADDRESS 12. REPORT DATE '.Commander, US Arm' " ttriel Command February 1987 ATTN: AMCSM-PL, 5001 Eisenhower Avenue, 13. NUMBEROFPAGESA lexandria, VA 22333-0001 5914. MONITORING AGENCY NAME & ADDRESS(If different from Controlling Office) IS. SECURITY CLASS. (of this roport) ASS FIC ATIONI DO WkGRADIN GI-SCHEDULE DWNRDNi6 STRIBUTION STATEMENT (of this Report)Approved for public release; distribution DISTRIBUTION STATEMENT ".of the Abstract entered In Block 20, If different from Report) Y18.

4 SUPPLEMENTARY NOTES DA 309883 *The views, opinions, and/or findings contained in this report are those of theau~hors and should not be construed as an official Department of the Armyr3ition, policy, or decision, unless so designated by other documentation. '>419. KEY WORDS (Continue on reer&e side It necessary nd identify by bock number)Depot MaintenanceMaintenance CostsCost Analysisr,0. ADSTRACT (Cbthua m rovt-- .It rr*coary acd Iderntfy by block numb,)Th. repair at depot of items grouped under one Procurement Request Order Number(, ON) is only authorized if the average per item repair cost does not exceeda predetermined maximum expenditure limit called the Maintenance Expenditure (MEL) or tV2 item manager that initiated the PRON approves a waiver : MEL.

5 If the MEL for a PRON is set too high, there is a possibility thatfailed items will be repaired when it would be more cost effective to the Armyto dispose of them and replace with newly acquired items. Conversely, if theMEL is set too low, there is a possibility that failed items that should beDI I JAN7 _i_ __ro__s_ .. 1413 EDTON OF I NOV 65 IS OBSOLETE NCAIEJAM 73. UNCLASSIFIED :,SECURITY CLASiFICATION OF THIS PAGE ( Data Entered)UNCLASSIFIEDSECURITY CLASSIFICATION OF THIS PAGE(flhon Dat& Bntorod)repaired will be disposed of. This calls for a unique, optimal MEL for eachPRON At the. present time the MEL for all depot reparable items is set at100% Of the item price as found in the army Master Data File (AMDF) or theCommodity Command Standard System (CCSS).

6 This value is compared to theestimated or ac-tual in-depot repair costs (Unit Maintenance Total Cost -UTOT).This MEL is recognized as not being optimal. In this report, a method isJeveloped for an optimal MEL for a PRON and a worksheet for per-forming the MEL calculations. The method requires that a current item pricebe used and incorporates all the relevant costs that should be included in abuy or repair decision to include a factor for any impact on readiness. Thecalculation using the worksheet is simple to understand and use, since onlyseven data values are required. Default data values are provided for quickMFL estimates. The calculation will be done manually until the procedure isautomated on CCSS.

7 The report also provides a procedure for exempting itemsfrom a MEL and request for waiver and for updating the MEL prior to theexecution of the PRON.'ft1 -UNCLASS IFI EDSECURITY CLASSIFICATION OF THIS PAGE(Whaen Data Entorod)e* .r!ACKNOWLEDGEMENTSThe US army Materiel Systems Analysis Activity (AMSAA) recognizes the "A Vfollowing individuals for contributing to this Reviewers: Tom Smith, Reliability, Availability, andMaintainability DivisionRichard Abeyta, John Lenassi, and David Dryden,Logistics Readiness and Analysis DivisionThe author is indebted to Mr. Daniel Taber, AMCSM-PL, who provided manyideas for the report, constructive criticism, and readily made available hismaintenance \ce,'k),I For"NTIS CRA&IDI I i3 8[ UB Y.]

8 U,..t ,b.,io',iAvaHibiliy Codes ..Avad a.,djorDlt sp. cIaiNext page is blank. '.' ;'-4.* ,9-~ 5",9~1iv455~5 CONTENTSACKNOWLEDGEMENTS ..1. INTRODUCTION ..,..,.. Requirement for Maintenance .. Purpose .. Objectives ..2, Limits and Scope .. Methodology ..22. MAINTENANCE .., Readiness Implicaions Maintenance Characteristics .. Depot Maintenance ..43. MAINTENANCE EXPENDITURE LIMITS .. Definition ..5 Purpose of MEL .. The Origins of MEL .. MEL in Other Services and Industry .. Current army ML Procedure .. Problems With the Current army Procedure ..94. APPROACHES CONSIDERED IN DEVELOPING MEL ..115. PROPOSEDMETHOD FOR DETERMiNINGMEL.

9 Component Cost Elements .. MEL Equations .. Worksheet ..176. USING THE "" ."."" ." ' " " " " .. Wke Discussion of Data Requirements'for'Completed Worse .. Data Sources .. Default Values for Worksheet Data ..217. FINDINGS ..27 -""8. CONCLUSIONS ..299.. 31 APPENDIXESA. References .. 33B. Level of Repair Analysis .. 37C. New MEL Procedure.. 41D. Sources For Cost Variables ..45 DISTRIBUTION LIST ..51vaJFIGURES 1 Figure Page1 Example of MEL Computation Worksheet .. 172 Example of Completed MEL Computation Worksheet ..203 Transportation, Packaging, and Handling Cost Curve ..23 TABLEST able i1 MEL Policy in Other Services ..72 MEL Policy in Selected Industries.

10 8-3 Cost Factor Sources and Default Values ..22* ,*vi .""772;\ DETERMINATION OF MAINTENANCE EXPENDITURE LIMITS FOR DEPOT REPARABLE ITEMSC hapter 1. Requirement for ,- To fulfill its mission of deterring war, the army requires a greatvariety and large quantity of the most effective equipment that the nation canafford. Having these tools of war available when needed is the essence ofreadiness. To maintain maximum readiness, unser,.'ceable (deteriorated andfailed) equipment must be returned to a serviceable condition or must be Three different actions can be taken on unserviceable equipment. Itcan undergo corrective maintenance; , returned to some level of serviceabilitythrough a repair, overhaul, or rebuild program; it can be discarded and replacedwith identical new equipment; or it can be discarded and replaced with newer,upgraded equipment.