Determining Optimal Variable Order Quantities (VOQ) of Raw Materials for Precast Concrete Production Considering Demand Variability and Uncertain Material Prices

This research aims to optimize raw material ordering strategies in the precast concrete manufacturing process considering uncertain prices and increasing demand for raw materials. Specifically, this study seeks to determine optimal order quantities and variable ordering cycle times for precast raw materials in multi-period inventory systems facing lifecycle (linearly increasing and decreasing) demand pattern of precast concrete components and price fluctuation which is also depending on the patterns of demand variability. A comprehensive mathematical formulation of the total cost function is presented, and the convexity of this cost function is analytically demonstrated. A practical industrial scenario illustrates the efficacy and utility of the designed solution algorithm within a precast concrete manufacturing facility through dynamic batch size adjustments, and the suggested model efficiently optimizes procurement costs and lowers the need for inventory keeping. Moreover, cost sensitivity analysis elucidates the influence of fluctuations in ordering volumes on overall procurement expenses, enabling managers to more accurately forecast and alleviate risks linked to market volatility. Thus, the findings of this study provide valuable insights for manufacturers and other sectors seeking to improve supply chain efficiency, avert superfluous expenses, and reduce storage costs, thereby attaining equilibrium between inventory management and production continuity.