Project procurement and disposal decisions: An inventory management model

In this paper, we develop a two-stage mathematical model to examine an important inventory management problem within a large-scale project context. Specifically, we analyze the procurement and disposal of an important, expensive item (e.g. pipeline). There is uncertainty surrounding total requiremen...

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Bibliographic Details
Published in:International journal of production economics 2001-05, Vol.71 (1), p.467-472
Main Author: Willoughby, Keith A
Format: Article
Language:English
Subjects:
Excess stock disposal
Inventory
Inventory control
Inventory management
Large-scale projects
Stochastic inventory models
Stochastic models
Studies
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Summary:In this paper, we develop a two-stage mathematical model to examine an important inventory management problem within a large-scale project context. Specifically, we analyze the procurement and disposal of an important, expensive item (e.g. pipeline). There is uncertainty surrounding total requirements of this item during a project. Surplus stock on-hand at the conclusion of the project may be disposed for revenue. However, it may be retained to satisfy requirements during a subsequent project. The time between projects follows a discrete probability distribution. The key decision variables involve the procurement quantity in the initial project as well as the best disposal quantity (should a surplus exist) at the conclusion of the project.
ISSN:0925-5273
1873-7579
DOI:10.1016/S0925-5273(00)00146-8