| Title |
Comparison of Raw Material Inventory Management Policies for a Precast Concrete Production Plant |
| Authors |
Kwon, Hyeonju ; Jeon, Sangwon ; Lee, Jaeil ; Jeong, Keunchae |
| DOI |
https://dx.doi.org/10.6106/KJCEM.2024.25.5.041 |
| Keywords |
Simulation; Arena; Modular; Precast Concrete; Inventory Management |
| Abstract |
In this study, we compare and analyze the performance of three inventory management policies for raw material inventory management in a Precast Concrete production plant: Fixed Order Quantity Policy (FOQP), Fixed Order Interval Policy (FOIP), and (s, S) Ordering Policy (sSOP). In order to make more realistic conclusion, we developed and utilized the ARENA simulation model, a performance evaluation tool that considers the variance of raw material demand and supply for the entire production process in a PC production plant using multiple raw materials. For the three policies, reorder point, order quantity, target level, and order interval parameters were initialized by using Economic Order Quantity (EOQ) model and then optimized through OptQuest. As a result of optimization, inventory management costs were reduced by an average of 97.28% compared to the EOQ model that does not consider the variance of demand and supply. After setting three influencing factors, Project Occurrence Cycle (POC), Raw Material Lead-time (RML), and Unit Stock-out Cost (USC), a performance evaluation was conducted for the three policies. As a result of evaluation, the inventory management costs of FOQP and sSOP, which determine order intervals by considering inventory levels by real-time or daily, were 30.6% and 27.9% lower than FOIP with fixed order intervals respectively. In addition, inventory management costs were affected by RML and USC factors excluding POC, but the differences were 2.17% and 2.09% respectively, which were not large due to the optimization of parameters for responding the variance of raw material demand and supply. |