[Before The]{.smallcaps}

POSTAL RATE COMMISSION

WASHINGTON, D.C. 20268--0001

+-----------------------------------+-----------------------------------+
| [Postal Rate and Fee Changes,     | > Docket No. R2001--1             |
| 2001]{.smallcaps}                 |                                   |
+-----------------------------------+-----------------------------------+

RESPONSE OF UNITED STATES POSTAL SERVICE

WITNESS BOZZO TO INTERROGATORIES OF UNITED PARCEL SERVICE

(UPS/USPS-T14-11 through 21)

The United States Postal Service hereby provides the responses of
witness Bozzo to the following interrogatories of United Parcel Service:
UPS/USPS-T14-11 through 21, filed on December 10, 2001.

Each interrogatory is stated verbatim and is followed by the response.

Respectfully submitted,

UNITED STATES POSTAL SERVICE

By its attorneys:

Daniel J. Foucheaux, Jr.

Chief Counsel, Ratemaking

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Frank R. Heselton

475 L\'Enfant Plaza West, S.W.

Washington, D.C. 20260--1137

\(202\) 268--4823; Fax --5402

December 26, 2001

**UPS/USPS-T14-11.**

The following questions are about negative values for Total Piece
Handlings ("TPH").

(a) Explain whether it is possible for TPH to take on negative values.

(b) Describe in detail the circumstances under which TPH may take on
    negative values.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    negative values for TPH. In particular, for each example, explain:

    i.  Of the weeks that are aggregated to construct the quarter, how
        many show negative TPH?

    ii. What is the total TPH for the weeks in the quarter for which TPH
        is negative?

    iii. What were the specific circumstance in the MODS system that
         resulted in the recording of the negative TPH for these
         examples?

**TABLE 1 -- EXAMPLES OF NEGATIVE TPH**

# Site ID MODS Operation Time Period TPH

77 08 1996, qtr 4 -2,190

210 12 2000, qtr 4 -4,762

121 17 1999, qtr 1 -2,955

**Response.**

a.  While it is not possible for actual TPH to take on negative values
    in a given period, measured TPH can take on negative values. Note
    that in operations where TPH is used as the output measure for the
    operation, observations with negative TPH are excluded from the
    regression sample.

b.  It is my understanding that negative values of MODS variables would
    result primarily from mis-entered manual adjustments to the MODS
    data.

c.  Negative values of TPH are rare. Please see the table provided in
    Attachment A to this response.

d.  (i)-(ii) I aggregated AP data to construct my quarterly dataset. The
    APs with negative TPH, and the TPH for those APs, are reported
    below.

  -------------- -------------- -------------- -------------- --------------
  Site ID        MODS Operation Time Period    AP(s) with     Total TPH
                                               Negative TPH   (000) in
                                                              Negative TPH
                                                              AP(s)

  77             08             PQ4, FY 1996   AP 13          -2,259

  121            17             PQ1, FY 1999   AP 2           -7,278

  210            12             PQ4, FY 2000   AP 12          -9,866
  -------------- -------------- -------------- -------------- --------------

> \(iii\) I am not aware of the specific circumstances of these
> examples.

**UPS/USPS-T14-12.**

The following questions are about negative values for Total Pieces Fed
("TPF").

(a) Explain whether it is possible for TPF to take on negative values.

(b) Describe in detail the circumstances under which TPF may take on
    negative values.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    negative values for TPF. In particular, for each example, explain:

    i.  Of the weeks that are aggregated to construct the quarter, how
        many show negative TPF?

    ii. What is the total TPF for the weeks in the quarter for which TPF
        is negative?

    iii. What were the specific circumstance in the MODS system that
         resulted in the recording of the negative TPF for these
         examples?

**TABLE 2 -- EXAMPLES OF NEGATIVE TPF**

# SiteID MODS Operation Quarter TPF

52 08 1995, qtr 3 -535

210 12 1998, qtr 4 -41,323

156 18 1995, qtr 2 -884,184

**Response.**

a.  It is not possible for actual TPF to take on negative values in a
    given period, but measured TPF can take on negative values. Note
    that in operations where TPF is used as the output measure for the
    operation, observations with negative TPF are excluded from the
    regression sample.

b.  Please see the response to UPS/USPS-T14-11(b).

c.  Negative values of TPF are rare. Please see the table provided in
    Attachment A to the response to UPS/USPS-T14-11.

d.  (i)-(ii) I aggregated AP data to construct my quarterly dataset. The
    APs with negative TPH, and the TPH for those APs, are reported
    below.

  -------------- -------------- -------------- -------------- --------------
  Site ID        MODS Operation Time Period    AP(s) with     Total TPF
                                               Negative TPF   (000) in
                                                              Negative TPF
                                                              AP(s)

  52             08             PQ3, FY 1995   AP 8           -542

  156            18             PQ2, FY 1995   AP 6           -961,939

  210            12             PQ4, FY 1998   AP 12          -44,478
  -------------- -------------- -------------- -------------- --------------

> \(iii\) I am not aware of the specific circumstances of these
> examples. Note that I do not use (or recommend use of) TPF data for
> manual operations such as group 08; see the response to
> UPS/USPS-T14-16.

**UPS/USPS-T14-13.**

The following questions are about negative values for First Handling
Pieces ("FHP").

(a) Explain whether it is possible for FHP to take on negative values.

(b) Describe in detail the circumstances under which FHP may take on
    negative values.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    negative values for FHP. In particular, for each example, explain:

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(i) Of the weeks that are aggregated to construct the quarter, how many
    show negative FHP?

(ii) What is the total FHP for the weeks in the quarter for which FHP is
     negative?

(iii) What were the specific circumstance in the MODS system that
      resulted in the recording of the negative FHP for these examples?

**TABLE 3 -- EXAMPLES OF NEGATIVE FHP**

# Site ID MODS Operation Quarter FHP

240 01 1998, qtr 1 -356

69 06 1998, qtr 1 -36,114

206 11 1997, qtr 1 -16,749

**Response.**

a.  It is not possible for actual FHP to take on negative values in a
    given period, but measured FHP can take on negative values. Note
    that I do not directly use FHP data in my analysis, but screens of
    the type I employ in my analysis would eliminate such observations
    from the regression samples.

b.  Please see the response to UPS/USPS-T14-11(b).

c.  Negative values of FHP are rare. Please see the table provided in
    Attachment A to the response to UPS/USPS-T14-11.

d.  (i)-(ii) I aggregated AP data to construct my quarterly dataset. The
    APs with negative FHP, and the FHP for those APs, are reported
    below.

  -------------- -------------- -------------- -------------- --------------
  Site ID        MODS Operation Time Period    AP(s) with     Total FHP
                                               Negative FHP   (000) in
                                                              Negative FHP
                                                              AP(s)

  69             06             PQ1, FY 1998   AP 1           -48,568

  206            11             PQ1, FY 1997   AP 3           -32,184

  240            01             PQ1, FY 1998   APs 1-3        -356
  -------------- -------------- -------------- -------------- --------------

> \(iii\) I am not aware of the specific circumstances of these
> examples. Note that for the FSM operations (group 11) at site 206,
> both TPH and TPF are positive in PQ1, FY 1998.

**UPS/USPS-T14-14.**

The following questions are about negative values for HRS (hours).

(a) Explain whether it is possible for HRS to take on negative values.

(b) Describe in detail the circumstances under which HRS may take on
    negative values.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    negative values for HRS. In particular, for each example, explain:

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(i) Of the weeks that are aggregated to construct the quarter, how many
    show negative HRS?

(ii) What is the total HRS for the weeks in the quarter for which HRS is
     negative?

(iii) What were the specific circumstance in the MODS system that
      resulted in the recording of the negative HRS for these examples?

**TABLE 4 -- EXAMPLES OF NEGATIVE HRS**

# Site ID MODS Operation Quarter HRS

89 05 1997, qtr 3 -24,610

178 17 1995, qtr 3 -990

7 08 1998, qtr 2 -363

**Response.**

a.  It is not possible for actual workhours to take on negative values
    in a given period, but measured workhours can take on negative
    values. Note that the screens I employ eliminate such observations
    from the regression samples.

b.  Please see the response to UPS/USPS-T14-11(b).

c.  Negative values of workhours are rare. Please see the table provided
    in Attachment A to the response to UPS/USPS-T14-11.

d.  (i)-(ii) I aggregated AP data to construct my quarterly dataset. The
    APs with negative workhours, and the workhours for those APs, are
    reported below.

  -------------- -------------- -------------- -------------- --------------
  Site ID        MODS Operation Time Period    AP(s) with     Total HRS
                                               Negative HRS   (000) in
                                                              Negative HRS
                                                              AP(s)

  7              08             PQ2, FY 1998   AP 6           -578

  89             05             PQ3, FY 1997   AP 9           -26,605

  178            17             PQ2, FY 1995   APs 7-8        -1,022
  -------------- -------------- -------------- -------------- --------------

> \(iii\) I am not aware of the specific circumstances of these
> examples.

**UPS/USPS-T14-15.**

The following questions are about intermittent gaps in the MODS data
series for particular sorting activities, where an intermittent gap is
defined as a non-positive value or values in between positive values.

(a) Explain whether it is possible for the Total Piece Handlings
    ("TPH"), Total Pieces Fed ("TPF"), hours ("HRS"), or First Handling
    Pieces ("FHP") series for a particular site to have intermittent
    gaps, as defined above.

(b) Describe in detail the circumstances under which such gaps can
    occur.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    intermittent gaps in the MODS data series:

**TABLE 5.1 -- INTERMITTENT GAPS FOR TPH**

[Site ID MODS Operation Start Date Gap Length (in qtrs)]{.underline}

189 08 1997, qtr 1 3

86 11 1995, qtr 2 6

94 17 1999, qtr 2 6

**TABLE 5.2 -- INTERMITTENT GAPS FOR HRS**

[Site ID MODS Operation Start Date Gap Length (in qtrs)]{.underline}

197 01 1998, qtr 1 9

226 03 1998, qtr 2 8

179 07 1997, qtr 2 3

**Response.**

a\. Yes.

b\. It is my understanding that gaps in the data series may result from
non-reporting (missing observations) for various reasons (see, e.g.,
Docket No. R2000-1, Tr. 15/6391), seasonality of some operations, or
relocation of equipment.

c\. Gaps in the data series are relatively uncommon.

d\. I am not aware of the specific circumstances of these examples.
However, I do not agree that all of the examples listed represent
"intermittent gaps" in the data. Sites 86, 179, and 197 do not appear to
have the listed operations in regular operation; you appear to have
identified some "noise" in the data rather than gaps as such. Site 226
appears not to regularly use the SPBS operations in group 03, but
regularly reports hours and volumes in group 04 (and hence group 12).

**UPS/USPS-T14-16.**

The following questions are about Total Piece Handlings ("TPH") and
Total Pieces Fed ("TPF") in manual operations.

(a) Should TPH equal TPF in manual operations?

(b) Describe in detail the circumstances that would cause TPH to differ
    from TPF in manual operations.

(c) Provide a specific example for each of the following examples where
    TPH does not equal TPF in a manual operation:

## TABLE 6 -- TPH NOT EQUAL TO TPF IN MANUAL OPERATIONS

# Site ID MODS Operation Year and Quarter TPF TPH

29 05 1995, qtr 3 28 3,158

243 05 1996, qtr 2 -1 6,307

248 07 1997, qtr 1 103 1,015

**Response.**

a.-c. No. Since, in principle, manual operations do not yield rejects,
manual TPH and TPF are conceptually identical, and most sites do not
report manual TPF. I am not aware of the use to which other sites put
the TPF field for manual operations, and thus do not use manual TPF
data.

**UPS/USPS-T14-17.**

The following questions are about the relationship between Total Pieces
Fed ("TPF") and Total Piece Handlings ("TPH") in automated/ mechanized
operations.

(a) Explain whether it is possible for TPF to be less than TPH

(b) Describe in detail the circumstances under which TPF can be less
    than TPH.

(c) Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

(d) Provide a specific explanation for each of the following examples of
    TPF being less than TPH:

**TABLE 7 -- TPF LESS THAN TPH**

# Site ID MODS Operation Year and Quarter TPF TPH

212 01 1996, qtr 4 31,149 61,014

11 12 2000, qtr 2 11,791 17,637

1 17 1996, qtr 2 78,521 119,574

**Response.**

a.  It is not possible for actual TPF to be less than actual TPH, but
    measured TPF can be less than measured TPH.

b.  Please see the response to UPS/USPS-T14-11(b).

c.  The circumstances are uncommon, but not as rare as negative values
    of MODS data. Accordingly, in Docket No. R2000-1, I determined that
    my results were not sensitive to my treatment of those observations.
    See Docket No. R2000-1, USPS-T-15 at 108, lines 7-13.

d.  I am not aware of the specific circumstances of these examples.

**UPS/USPS-T14-18.**

The following questions are about the relationship between Total Pieces
Fed ("TPF") and First Handling Pieces ("FHP").

a.  Explain whether it is possible for TPF to be less than FHP.

b.  Describe in detail the circumstances under which TPF can be less
    than FHP.

c.  Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

d.  Provide a specific explanation for each of the following examples of
    TPF being less than FHP:

**TABLE 8 -- TPF LESS THAN FHP**

# Site ID MODS Operation Year and Quarter TPF FHP

3 01 1997, qtr 2 86,168 100,463

156 12 1995, qtr 1 912 9,021

10 19 1998, qtr 3 18,587 21,249

**Response.**

a.  It is not possible for actual TPF to be less than actual FHP, but
    measured FHP can be less than measured TPF.

b.  In automated and mechanized operations, TPF are obtained from
    machine counts, whereas FHP generally are converted from weight or
    containers using nationally standardized conversion factors. The
    difference between the converted and actual FHP is the primary
    reason for FHP to exceed TPF. This is a significant reason why I do
    not recommend the use of FHP data to measure the output of automated
    and mechanized operations. In manual operations, TPH should be used
    for an appropriate comparison.

c.  The circumstances described in part (b) appear not to be especially
    uncommon for some operations (e.g., OCR) where a relatively large
    fraction of total pieces fed are first handlings and where
    subsequent handlings in the same operation are uncommon. For manual
    operations and other operations (e.g., DBCS) with relatively more
    subsequent handlings in the same operation (i.e., higher TPF/FHP
    ratios), it is uncommon for FHP to exceed TPF or TPH.

d.  I am not aware of the specific circumstances of these examples, but
    would not generally expect measured FHP to be less than measured
    TPF, as explained above. Please note also that in the SPBS operation
    (12), TPF (and TPH) will measure bundles of flat-shaped pieces,
    whereas it is my understanding that FHP conversions for those
    source/type codes will count the pieces (or copies) in the bundles.

**UPS/USPS-T14-19.**

The following questions are about the relationship between Total Pieces
Fed ("TPF") and hours ("HRS").

a.  Explain whether it is possible that while TPF is non-positive, HRS
    is positive.

b.  Describe in detail the circumstances under which TPF is
    non-positive, but HRS is positive.

c.  Explain whether the circumstances described in part (b) are likely
    to be common or uncommon.

d.  Provide a specific explanation for each of the following examples of
    TPF being non-positive and HRS being positive:

**TABLE 9 -- TPF NON-POSITIVE AND HRS POSITIVE**

# Site ID MODS Operation Year and Quarter TPF HRS

157 12 1998, qtr 1 0 1,071

2 07 1996, qtr 4 0 14,707

11 07 2000, qtr 1 0 26,063

**Response.**

a.  I would expect that workhours are used productively in normal mail
    processing operations, so that if actual workhours are positive for
    a sorting operation, then actual TPF would also be positive.
    However, it is possible for measured TPF to be non-positive while
    measured workhours are positive. Additionally, in manual operations,
    zero TPF is normally reported; see the response to UPS/USPS-T14-16.
    Thus, an appropriate comparison of this type for manual operations
    should use TPH.

b.  It is my understanding that TPF (or TPH) and workhours are measured
    independently---the former via machine counts and the latter via
    time clock data. Failure to report TPF (or TPH) for an operation
    with positive workhours could lead to the situation described, as
    could certain types of misreporting of hours or TPF (or TPH). See
    also the response to UPS/USPS-T14-11(b).

c.  The circumstances described in part (b) are rare. Please see the
    attachment to the response to UPS/USPS-T14-11.

d.  I am not aware of a specific explanation for the examples in
    Table 9. However, I would note that the two examples for operation
    07 (manual parcels) should use TPH rather than TPF for an
    appropriate comparison; see the response to part (a), above.
    According to USPS-LR-J-56 and USPS-LR-J-179, TPH in both operation
    07 examples is positive.

**UPS/USPS-T14-20.**

The mpe.txt (for 93, 94, 95, 96, 97 and 98) files, provided in R2000,
provide data on year-end equipment (identified by PCNs) by plant.

\(a\) Explain whether it is possible for a facility to have idle
equipment.

(i) What types of equipment are likely to remain idle?

(ii) Explain in detail why a piece of mail sorting equipment may remain
     idle (i.e. not being used to process mail). For example, can mail
     sorting equipment remain idle because it is temporarily out of use,
     it is no longer in use, or because it is a new machine that needs
     to get up and running? List all plausible reasons why mail sorting
     equipment may remain idle.

(iii) Describe the likelihood of each of the reasons for mail sorting
      equipment to be idle listed above.

(iv) If an idle piece of mail sorting equipment is temporarily out of
     use, what is the average period of time over which it is likely to
     remain out of use. Explain whether the idle time is likely to be
     measured in days, weeks, months, or years.

(v) If an idle piece of mail sorting equipment is no longer in use, how
    long would it be stored at the mail sorting facility before it is
    removed?

(vi) How much time does it take for a new machine to be installed and
     integrated into the plant and begin to process mail?

\(b\) Describe in detail the circumstances when at least one DBCS
machine is present at a facility, but TPH18 and HRS18 (MODS data for the
BCS/DBCS MODS pool) are non-positive?

(i) Explain whether the circumstances described above are likely to be
    common or uncommon.

(ii) Provide a specific explanation for each of the following examples
     of instances in which a DBCS machine is present at a facility, but
     the MODS variables from MODS group 18 are non-positive:

TABLE 10.1 -- DBCS EQUIPMENT PRESENT BUT ASSOCIATED MODS DATA
NON-POSITIVE

# Site ID Year and Quarter Number of DBCS machines TPH HRS

17 1998, qtr 4 4 0 0

46 1996, qtr 1 34 0 0

\(c\) Describe in detail the circumstances when at least one OCR machine
is present at a facility, but TPH01 and HRS01 (MODS data for the OCR
MODS pool) are non-positive?

(i) Explain whether the circumstances described above are likely to be
    common or uncommon.

(ii) Provide a specific explanation for each of the following examples
     of instances in which an Optical Character Reader ("OCR") machine
     (PCN 960000 or PCN 960010) is present at a facility, but the MODS
     variables from MODS group 01 are nonpositive:

TABLE 10.2 -- OCR EQUIPMENT PRESENT AND BUT ASSOCIATED MODS DATA
NON-POSITIVE

# Site ID Year and Quarter Number of OCR machines TPH HRS

44 1996, qtr 4 2 0 0

310 1998, qtr 1 3 0 0

\(d\) Describe in detail the circumstances under which when at least one
Flat Sorting Machine ("FSM") machine is present at a facility, but TPH11
and HRS11 (MODS data for the FSM MODS pool) are non-positive?

(i) Explain whether the circumstances described above are likely to be
    common or uncommon.

(ii) Provide a specific explanation for each of the following examples
     of instances in which an FSM machine (PCN 920000) is present at a
     facility, but the MODS variables from MODS group 11 are
     non-positive:

**TABLE 10.3 -- FSM EQUIPMENT PRESENT AND BUT ASSOCIATED MODS DATA
NON-POSITIVE**

# Site ID Year and Quarter Number of FSM machines TPH HRS

40 1996, qtr 4 3 0 0

164 1996, qtr 2 1 0 0

\(e\) Describe in detail the circumstances when at least one Small
Parcel Bundle Sorter ("SPBS") machine is present at a facility, but
TPH12, HRS12, TPH03, HRS03, TPH04, or HRS04 (MODS data for the SPBS MODS
pool) are non-positive?

(i) Explain whether the circumstances described above are likely to be
    common or uncommon.

(ii) Should a facility with positive TPH03 necessarily have positive
     TPH04? Explain.

(iii) Should a facility with a positive TPH03 or TPH04 necessarily have
      a positive TPH12? Explain.

(iv) Provide a specific explanation for each of the following examples
     of instances in which an SPBS machine (PCN 930040) is present at a
     facility, but the MODS variables from MODS group 12, 03, or 04 are
     non-positive:

**TABLE 10.4 -- SPBS EQUIPMENT PRESENT AND BUT ASSOCIATED MODS DATA
NON-POSITIVE**

# Site ID Year and Quarter Number of SPBS machines MODS Group TPH HRS

197 1997, qtr 2 3 03 0 0

107 1998, qtr 2 6 04 0 0

\(f\) Describe in detail the circumstances under which when at least one
Letter Sorting Machine ("LSM") is present at a facility, but TPH02 and
HRS02 (MODS data for the LSM MODS pool) are non-positive?

(i) Explain whether the circumstances described above are likely to be
    common or uncommon.

(ii) Provide a specific explanation for each of the following examples
     of instances in which an LSM machine (LSM-Multi Pos, PCN 910000 and
     LSM-Single Pos, PCN 910010) is present at a facility, but the MODS
     variables from MODS group 02 are non-positive:

**TABLE 10.5 -- LSM EQUIPMENT PRESENT AND BUT ASSOCIATED MODS**

**DATA NON-POSITIVE**

# Site ID Year and Quarter Number of OCR machines TPH HRS

3 1998, qtr 4 5 0 0

64 1997, qtr 4 16 0 0

**Response.**

a\. Yes.

(i) It is not clear what precisely you mean by \"remain idle.\" In
    principle, any type of equipment may be idle at least for some
    period of time.

(ii) The reasons listed in this part of the interrogatory are plausible.
     I would note that a machine may be temporarily out of use for
     maintenance reasons or because it is not employed for processing on
     a particular tour or at a particular time within a tour.

\(iii\) All of the reasons listed above are likely reasons why equipment
may be idle.

\(iv\) It is my understanding that temporarily idled equipment will tend
to be out of service for relatively short periods of time.

\(v\) Due to space constraints, unused mail processing equipment is
normally removed relatively quickly. However, depreciated equipment
(such as LSMs and obsolete models of OCRs and FSMs) may not be promptly
removed from the PPAM (equipment) records.

\(vi\) It is my understanding that assembly, testing, and acceptance of
new equipment may take a month.

b\. I expect that the circumstances you describe would result primarily
from differences in the periodicities of the MODS and PPAM data you
compared (see also the response to part a(v), above) or from missing or
non-reported MODS data---note that the PPAM data coverage is not limited
to facilities reporting MODS (see c(ii), below).

\(i\) I would expect material disagreements between the MODS and PPAM
data to be relatively uncommon. As described below, most of the examples
provided do not appear especially anomalous.

\(ii\) It is not clear precisely how you tabulated the machine counts.
In general, though, it would appear that you did so by counting the PPAM
records for given PCNs, which is generally inappropriate since there is
not a one-to-one correspondence between PPAM records and equipment. I
would note that site 17 is excluded from my analysis and that site 46
appears to have started regular DBCS operations later in FY 1996.

c\. Please see the response to part (b).

\(i\) Please see the response to part b(i)

\(ii\) It appears that you tabulated the machine counts by counting the
PPAM records for the given PCNs, which is generally inappropriate since
there is not a one-to-one correspondence between PPAM records and pieces
of equipment. Site 44 ceased reporting MODS data (see Docket No.
R2000-1, Tr. 15/6390). According to the data presented in LR-J-179, site
310's OCR equipment appears to have been removed from the PPAM records
between the end of FY 1998 (i.e., beginning of FY 1999) and the end of
FY 1999; regular OCR operations; regular OCR operations appear to have
ceased there at the end of FY 1997.

d\. Please see the response to part (b).

\(i\) Please see the response to part b(i)

\(ii\) It appears that you tabulated the machine counts by counting the
PPAM records for the given PCNs, which is generally inappropriate since
there is not a one-to-one correspondence between PPAM records and pieces
of equipment. According to the data presented in LR-J-179, site 40's FSM
equipment appears to have been removed from the PPAM records as of the
end of FY 1996, which is consistent with the end of reported FSM
operations as of PQ3, FY 1996. Site 164's FSM equipment had been removed
from the PPAM records as of the end of FY 1997.

e\. Please see the response to part (b).

\(i\) Please see the response to part b(i).

\(ii\) Not necessarily. A site that does not employ dedicated SPBS
Priority Mail operations, or which only employs dedicated SPBS Priority
Mail operations, should only use group 03 or 04 but not the other.

\(iii\) The MODS data for group 12 are defined as the sum of the
corresponding data for groups 03 and 04.

\(iv\) It appears that you tabulated the machine counts by counting the
PPAM records for the given PCNs, which is generally inappropriate since
there is not a one-to-one correspondence between PPAM records and pieces
of equipment. Additionally, both of the sites listed in Table 10.4
report SPBS activity (i.e., in the other SPBS group to the one listed in
the table). Thus, there is no anomaly in either case.

f\. Please see the response to part (b).

\(i\) Please see the response to part b(i). Note that it appears not to
be especially uncommon that sites are slow to remove PPAM records for
equipment, such as LSMs, that are likely to be fully depreciated.

\(ii\) It appears that you tabulated the machine counts by counting the
PPAM records for the given PCNs, which is generally inappropriate since
there is not a one-to-one correspondence between PPAM records and pieces
of equipment. Site 3 appears to have terminated LSM operations during FY
1998. According to LR-J-179, site 3 does not appear to have PPAM records
for LSM equipment as of the end of FY 1998, thus there is no anomaly.
Site 64 appears to be an example of the situation described in response
to f(i), above; its LSM appears to have been removed from the PPAM
records in FY 2001.

**UPS/USPS-T14-21.**

The following question is about the upper and lower productivity bounds
used to filter the regression sample that forms the basis for the
econometric volume variability estimates.

\(a\) Explain the method by which the upper and lower bounds for each
MODS group are determined.

\(b\) Explain the motivation for filtering on productivity.

\(c\) If the approach or approaches described in part (a) do not include
well established statistical methods for identifying outliers (as
described, for example in Regression Diagnostics: Identifying
Influential Data and Sources of Collinearity by David A. Belsley, Edwin
Kuh and Roy E. Welsch, John Wiley & Sons, 1980), explain why these were
not used.

Response.

a.-b. Please see Docket No. R2000-1, USPS-T-15 at 80-82 and 110-111.

c\. Using "non-sample" information---in this case, operational
information on machine and worker capabilities---to identify erroneous
data is a statistically.

**CERTIFICATE OF SERVICE**

I hereby certify that I have this day served the foregoing document upon
all participants of record in this proceeding in accordance with section
12 of the Rules of Practice.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Frank R. Heselton

475 L\'Enfant Plaza West, S.W.

Washington, D.C. 20260--1137

December 26, 2001