Review of GSA's Method of Supply Model

PSAD-80-7: Published: Nov 16, 1979. Publicly Released: Nov 16, 1979.

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The Federal Supply Service (FSS) has developed a model for determining the most effective way to provide commonly used items to federal agencies. An evaluation of the validity and effectiveness of this model was requested. Federal agencies and executive officers use four methods for filling their requirements for furniture, office supplies and other commonly used items. These methods are referred to as stock, nonstock, schedules, and agency local purchase. FSS has central control over stock and nonstock purchasing. For the schedules method, FSS contracts for items which the agencies then order directly from the conractor. In this case, FSS does not control the quantities purchased or keep records of the amount agencies spend. The agencies procure items directly under the agency local method. FSS keeps no records of these purchases.

The evaluation of the model found that the stock savings factors were used improperly in the equations, and the safety level stock was computed in an inconsistent manner. There were several minor errors and inconsistencies. In the equations, the unit purchase price was the same under the stock method as under the schedule method. It was felt that the schedules method unit price should be higher because of price discounts from buying larger quantities of goods in the stock program.

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