The document provides a step-by-step explanation of the Perform to Serve (PTS) algorithm used to evaluate Sailors' applications for reenlistment each month. It explains that Sailors are first evaluated based on their commanding officer's recommendation for retention. They are then ranked based on factors like paygrade, selection for advancement, evaluation history, critical job qualifications, physical fitness, and time until end of service obligation. Sailors' records are also reviewed for issues like misconduct or security clearance. Those ranking highest based on these factors are granted reenlistment quotas each month.