Decision method for standard stock size to reduce cutting cost and end material in special steel sales company

Abstract

In the sale of steel materials such as tool steel, it is important to optimize the size of standard stocks to reduce end material and cutting costs resulting from number of cuts and cutting area. If there is difference between the size of standard stocks and the sales size of steel, excess cutting and end material occur. So, the size of standard stocks is important to reduce end material and cutting cost. However, in the conventional method, stock manager analyzes past orders and determines the size of standard stocks which is not the optimum. Therefore, we developed a method to determine the size of standard stocks that reduce cutting costs and end material by (1) creating candidates for standard stocks, (2) giving evaluation score to all combinations of past orders allocations to standard stocks candidates and (3) sorting out optimum standard stocks by mixed integer programing so that total evaluation score is high. As a result of the computational experiment, the development method reduced 2.7% number of cuts, 17.3% cutting area, and 6.3% end material volume compared to the conventional method.

Keywords

• inventory management
• steel
• standard stock
• 3d cutting
• optimization