Material Supply Optimization of Large Scale Projects from a Total Cost of Ownership Perspective

Efficient procurement and delivery plan of materials plays an important role in reducing construction cost of a large scale project, since the expenses of materials supply constitute the main cost of it. Little attention was given in the literature to decision on appropriate material supply of large scale projects, in the case of multiple periods, multiple suppliers, with a transit warehouse and suppliers´ capacity constraints. Most of models analyzing such decision tended to consider only purchase cost, although the costs of transportation and storage may be significantly important to the decision. After educing the necessary and sufficient condition of ensuring the continuity of the construction process and the expression of the storage cost, we developed a optimization model minimizing the total cost, including purchase cost, transportation cost and storage cost of all periods. Then, the model was transformed into a multidimensional dynamic programming model, and the algorithm based a heuristic method for it to attain the optimal material supply scheme was given. Finally, we presented a numerical example and analyzed the results which show that the optimal material supply scheme can reduce the total cost.