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Answer:Based on the search results, here is the answer to the question:According to the Department of Defense Financial Management Regulation (Volume 11A, Chapter 1), there are two main cases where goods can be produced and supplied in lieu of another item:Materiel to be Replaced1:When a DoD Component transfers or sells material, including equipment, to other federal agencies or private parties, and the material is required to be replaced (i.e., similar, but not exact) or replaced in-kind (i.e., exact), the material must be transferred or sold at the estimated replacement cost. This price is determined based on the normal useful peacetime life of the item and an adjustment for the age and condition of the item being sold.Materiel Not to be Replaced1:If the material, including equipment, being transferred or sold to other federal agencies and private parties is not required to be replaced, the DoD Component must sell it at the original acquisition cost, net of any accumulated depreciation/amortization (i.e., net book value). If the original acquisition cost cannot be reasonably ascertained, the cost of the material will be its fair value at the time of transfer.In summary, the key factors are whether the transferred or sold goods need to be replaced, and if so, the estimated replacement cost is used. If no replacement is required, the original acquisition cost net of depreciation is used, or the fair value if the original cost is unknown.
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