Determination of start times and ordering plans for two-period projects with interdependent demand in project-oriented organizations: A case study on molding industry

Abstract

The objective of the present study is to determine the start times and ordering plans for two-period projects in project-oriented organizations. The following assumptions are made: orders can be placed in either of a project’s two consecutive periods; and the same raw materials are used, which are ordered at the start of the periods according to their interdependent demands. The main innovation of the present research is to develop a model that is mainly based on the two-period newsvendor problem, but assumes that demand is interdependent, i.e. it is actually a combination of inventory and project management. After presenting the model, numerical meth-ods are used to approximate the order quantities for each period. Near-optimal solutions of a numerical example, in a case study on molding industry, are obtained using a genetic algorithm. Results show that the proposed model with interdependent demand provides a better solution than independent demand. The model is applicable to large-scale industrial and construction pro-jects where the majority of raw materials have of the same nature.

Keywords

• Project management
• Inventory management
• Two-period interdependent newsvendor
• Genetic algorithm