Construction Material Safety-Stock Determination Under Nonstationary Stochastic Demand and Random Supply Yield

PROJECT TITLE :

Construction Material Safety-Stock Determination Under Nonstationary Stochastic Demand and Random Supply Yield

ABSTRACT:

Nonstationary stochastic demand and random supply yield have led to a nice challenge in construction material management. Appropriate safety stocks can cope with uncertainty in each demand and supply yield, and improve the construction price and productivity significantly. But the protection stock is sometimes determined by planner's expertise or rough analysis in management practice, that leads to overstock or understock situations frequently. For changing this case, this paper focuses on analysis of the stochastic inventory control drawback of construction material, and develops a general safety-stock determination approach under nonstationary stochastic demand and random supply yield. Primarily based on the linear-order unleash rule and modified base-stock definition, the inventory balance equation is developed. Then, a coverage random variable, which incorporates the entire information of outstanding orders, is defined to represent the outflows and inflows to stock over risk periods. Meanwhile, the fixed-point iteration technique is adopted to calculate the time-varying safety-stock level beneath predefined service-level (nonstockout likelihood) constraint. Finally, a numerical analysis is conducted to investigate the relative performance of the proposed safety-stock approach and days of offer rule. The result demonstrates a considerable service improvement and inventory decrease of the security-stock approach.

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