The U.S. Army's two ammunition ports-Military Ocean Terminal Concord (MOTCO) and Military Ocean Terminal Sunny Point (MOTSU)-have different funding approaches and accounting systems, and a central question in this research is what the most appropriate financial structure should be. Would consolidation to a single approach be desirable? To help answer this question, the authors develop two variations of an ammunition port funding policy. To do so, they interviewed subject matter experts, reviewed the literature on working capital fund pricing policies, and examined Department of Defense financial regulations. They developed several criteria to help in their evaluation: the funding mechanism should encourage efficient use of the ports; funding should not vary sharply over time; the funding mechanism should use existing or easily obtained financial data as much as possible; and the other military services should pay for their use of the ports. The authors' proposed variations have customers facing marginal costs when deciding how much workload to put through a port. Efficiency is enhanced when customers make decisions based on marginal, not average, costs. However, a key mitigating characteristic for ammunition ports is the apparently limited price elasticity of demand for the ports' services. When customers have greater demand elasticity, pricing decisions and hence the chosen funding approach are of greater importance.

"Arroyo Center"--T.p. "Prepared for the United States Army"--T.p. "TR-1204-A"--p. [4] of Cover. "Prepared for the United States Army." "Arroyo Center."

Introduction -- MOTCO's and MOTSU's workload and finances -- Prospective port funding arrangement s-- Conclusions -- Appendix: an overview of defense working capital funds.