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 scores, critical job qualifications, physical fitness, and time until end of service. Sailors who score higher in these areas will be prioritized to receive one of the limited number of quotas available each month for reenlistment.