such as divisions, air-wings and most ships, are not considered as assets of the supply system. These items are in the hands of the ultimate user and as such are carried as station properties or in the individual unit inventories where they remain until consumed, destroyed, captured, lost or otherwise disposed of. Part II, Section B, of this report presents data on inventories which have been issued from the supply system to the ultimate users. If such an item in a military unit becomes unserviceable, it is normally replaced by a serviceable item from the supply system. The unserviceable item is returned to the supply system where it may be repaired and put back in supply channels or declared excess and disposed of. Also not included in the supply inventory totals is the value of surplus personal property which has been turned over to property disposal officers and is awaiting disposition. Table 44 in Part II, Section D, shows the value of such property. This surplus property represents excess transferred from the supply system, and transfers from equipment in use and from industrial funds. Stock Funds Stock funds do not constitute a separate supply system. They are operational and financial devices employed by the military services principally to facilitate financial control over consumption-type supply items for which there is recurring demand. The stock fund mechanism permits the military services to handle inventories of such continuous demand items on a replacement basis much as private business firms do when they replace stocks depleted by sales with new stocks purchased with the proceeds from Because of the widespread interest in stock fund operations such sales. as a means of improving supply and fiscal management and of controlling of inventories, data representing stock fund inventories for each military service are shown separately in this section. The stock fund inventories are also included in the over-all totals for the entire supply system of each military service. Data representing Reporting of Categories and Inventory Accounts the dollar value of inventories in the aggregate supply system, both the items which are financed by stock funds and those financed from appropriated funds, are shown for each of the military services in the tables in this section. Each of these tables show the dollar amount of inventories in each major commodity category (groupings of similar kinds of supplies and equipment) and in each strata (groupings according to the purpose for which the supplies are retained). The stratification accounts in use by the military services are uniform, and are (1) Peacetime Operating, (2) Mobilization Reserve, (3) Economic Retention, (4) Contingency Retention, (5) Excess, and (6) Claimant stocks. In addition, stocks in-transit and stocks in hands of contractors are also accounted for and reported by the Army and Navy. These inventory accounts are defined as follows: a. Peacetime Operating Stocks are stocks in depots and posts, camps and stations held for issue to using units to equip and train the planned peacetime United States Forces. b. Mobilization Reserve Stocks are stocks held for the account of that portion of the Mobilization Reserve Materiel Requirement for which procurement is authorized. They include the prepositioned stocks held in specific locations in condition for immediate shipment or use. d. C. Economic Retention Stocks are stocks in long supply which are being retained to meet future requirements since it is more economical to retain them than it is to dispose and later have to purchase them. Contingency Retention Stocks are stocks in long supply for which there is no programmed requirements but which should be retained for military or defense contingencies. Only military type items, that is, items not ordinarily produced commercially for civilian consumption, may be placed in the contingency retention category. e. Excess Stocks are stocks classified as excess to the needs of a military service but not yet disposed of or, as in the case of the Army, stocks excess to the needs of an Army Command but not necessarily excess to the Army supply system. In this year's report, all the stocks that have been determined to be surplus or foreign excess (the designation of surplus stocks in overseas areas) that have been transferred to property disposal officers for sale or other dispostion, are shown on Table 44 and are no longer included in the supply systems tables. f. Claimant Stocks are stocks on hand in a military service which are being held for another service or government agency (such as Atomic Energy Commission). Stocks held for reserve components are not carried in this claimant classification but are combined with those of the military service. In-transit stocks are those to which title has passed to the military service, which are enroute (a) from manufacturers or suppliers, but which have not been physically received; (b) from Continental United States depots to overseas commands or vice versa; (c) from Continental United 2. Department of Defense Summary The total value of Department of Defense supply system inventories was reduced by $3.2 billion during Fiscal Year 1959, from $47.7 billion on 30 June 1958 to $44.5 billion as of 30 June 1959. This reduction was composed of a decrease in value of Stock Fund inventories of $0.8 billion and a decrease in value of Appropriated Fund inventories of $2.4 billion. Of the $3.2 billion decrease, Army accounted for $1.6 billion, Navy and Marine Corps for $1.2 billion, and Air Force for $0.4 billion. Table 31 shows that Army held the largest part of the total value of supply system inventories, $18.6 billion or 41.9 percent, Navy and Marine Corps together accounted for $13.6 billion (30.4 percent), and Air Force for $12.3 billion (27.1 percent). The total value of Stock Fund inventories was $8.2 billion, compared to $36.3 billion in Appropriated Fund inventories. More than two thirds (67.5 percent) of the value of Stock Fund inventories were held by Army including all Department of Defense wholesale stocks of subsistence and clothing and textiles; Navy and Marine Corps including all the Department of Defense wholesale stocks of medical and dental materiel accounted for 27.1 percent; and Air Force accounted for only 5.4 percent. Of the Appropriated Fund inventories, 36.1 percent belonged to Army; 31.2 percent to Navy and Marine Corps; and 32.7 percent to the Air Force. These data are presented in Chart 7. |