A Methodology for Accurately Predicting Demand for Airlift of Military Cargo to Overseas Destinations

Recent developments in aircraft technology will create greater airlift capabilities at lower costs. How will this increased capability be effectively utilized by the Department of Defense? Time-series extrapolations of air-cargo demand have been made in the past for the civil sector of our economy and similar projections have been proposed for military airlift planning. These proved less than successful when compared with actual tonnages generated. This paper will explore a different methodology for predicting airlift demand in the military establishment. Basic data, consisting of approximately 3.8 million commodities and millions of shipments recorded on magnetic automatic data processing tapes, are obtained from all DOD supply management activities. Two information files are established. One is a catalogue file reflecting the physical characteristics (weight, cube, price, etc.) of the commodities that influence total distribution costs of delivering the items to overseas destinations. The second is a demandfile containing the actual volume and traffic flow of the commodities. From these files, total distribution costs for air and surface movement are computed by a mathematical model for each commodity to determine the break-even air rate. The economically air-eligible commodities are then correlated with the volume and traffic flow to determine the elasticity of demand at various air ton-mile rates. Based on known operating costs of new aircraft, logical requirements for airlift can be established. At the same time, criteria for selecting air-eligible commodities are based on economic considerations, thus producing the least-cost method of supplying overseas activities.