Abstract
We study a new class of problems—recurrent projects with random material delays, at the interface between project and supply chain management. Recurrent projects are those similar in schedule and material requirements. We present the model of project-driven supply chain (PDSC) to jointly optimize the safety-stock decisions in material supply chains and the crashing decisions in projects. We prove certain convexity properties which allow us to characterize the optimal crashing policy. We study the interaction between supply chain inventory decisions and project crashing decisions, and demonstrate the impact of the PDSC model using examples based on real-world practice.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aquilano, N. J., & Smith, D. E. (1980). A formal set of algorithms for project scheduling with critical path method-material requirements planning. Journal of Operations Management, 1, 57–67.
Axsater, S. (1990). Simple solution procedures for a class of two-echelon inventory problems. Operations Research, 38, 64–69.
Axsater, S. (2006). Inventory control (2nd ed.). New York: Springer.
Brown, K., Schmitt, T. G., Schonberger, R. J., & Dennis, S. (2004). Quadrant homes applies lean concepts in a project environment. Interfaces, 34, 442–450.
Dodin, B., & Elimam, A. A. (2001). Integrated project scheduling and material planning with variable activity duration and rewards. IIE Transactions, 33, 1005–1018.
Elfving, J. A., Ballard, G., & Talvitie, U. (2010). Standardizing logistics at the corporate level towards lean logistics in construction. In Proceedings IGLC-18, July 2010, Technion, Haifa, Israel (pp. 222–231).
Graves, S. C., & Willems, S. P. (2000). Optimizing strategic safety stock placement in supply chains. Manufacturing & Service Operations Management, 2, 68–83.
Graves, S. C., & Willems, S. P. (2003). Supply chain design: safety stock placement and supply chain configuration. In A. G. de Kok & S. C. Graves (Eds.), Handbooks in operations research and management science: Vol. 11. Supply chain management: design, coordination and operation. Amsterdam: North-Holland.
Graves, S. C., & Willems, S. P. (2005). Optimizing the supply chain configuration for new products. Management Science, 51, 1165–1180.
Hadley, G., & Whitin, T. M. (1963). Analysis of inventory systems. Englewood Cliffs: Prentice-Hall.
Hariharan, R., & Zipkin, P. (1995). Customer-order information, leadtimes, and inventories. Management Science, 41, 1599–1607.
Hausman, W. H., Lee, H. L., & Zhang, A. X. (1998). Joint demand fulfillment probability in a multi-item inventory system with independent order-up-to policies. European Journal of Operational Research, 109, 646–659.
Jozefowska, J., & Weglarz, J. (2006). Perspectives in modern project scheduling (1st ed.). Berlin: Springer.
Kerwin, K. (2005). BW 50: A new blueprint at Pulte Homes. BusinessWeek, October 3rd, 2005.
Nahmias, S. (2004). Production and operations analysis (5th ed.). Boston: McGraw-Hill/Irwin.
O’Brien, W. J., London, K., & Vrijhoef, R. (2002). Construction supply chain modeling: a research review and interdisciplinary research agenda. In Proceedings IGLC-10, 1–19 August 2002, Gramado, Brazil.
Ozdamar, L., & Ulusoy, G. (1995). A survey on the resource-constrained project scheduling problem. IIE Transactions, 27, 574–586.
Pinedo, M. (2005). Planning and scheduling in manufacturing and services. New York: Springer.
Porteus, E. L. (2002). Foundations of stochastic inventory theory. California: Stanford University Press.
Rubinstein, R. Y., & Shapiro, A. (1993). Discrete event systems: sensitivity analysis and stochastic optimization by the score function method. New York: Wiley.
Schmitt, T. G., & Faaland, B. (2004). Scheduling recurrent construction. Naval Research Logistics, 51, 1102–1128.
Shah, M., & Zhao, Y. (2009). Construction resource management. Newark: ICM Inc. Rutgers Business School Case Study.
Simchi-Levi, D., & Zhao, Y. (2011). Performance evaluation of stochastic multi-echelon inventory systems: a survey. Advances in Operations Research, 2012, 1–34.
Smith-Danials, D. E., & Aquilano, N. J. (1984). Constrained resource project scheduling subject to material constraints. Journal of Operations Management, 4, 369–388.
Smith-Daniels, D. E., & Smith-Daniels, V. L. (1987). Optimal project scheduling with materials ordering. IIE Transactions, 19, 122–129.
Somerville, C. T. (1999). Residential construction costs and the supply of new housing: endogeneity and bias in construction cost indexes. Journal of Real Estate Finance and Economics, 18, 43–62.
Tommelein, I. D., Walsh, K. D., & Hershauer, J. C. (2003). Improving capital projects supply chain performance (Research Report No. 172-11). Construction Industry Institute, Austin, TX.
Tommelein, I. D., Ballard, G., & Kaminsky, P. (2009). Supply chain management for lean project delivery. In W. J. O’Brien, C. T. Formoso, R. Vrijhoef, & K. A. London (Eds.), Construction supply chain management handbook. New York: CRC Press/Taylor & Francis. Chap. 6.
Vaidyanathan, K., & Howell, G. (2007). Construction supply chain maturity model—conceptual framework. In Proceedings IGLC-15, July 2007, Michigan, USA (pp. 170–180).
Vrijhoef, R., & Koskela, L. (2000). Roles of supply chain management in construction. European Journal of Purchasing and Supply Chain Management, 6, 169–178.
Walsh, K. D., Hershauer, J. C., Tommelein, I. D., & Walsh, T. A. (2004). Strategic positioning of inventory to match demand in a capital projects supply chain. Journal of Construction Engineering and Management, 130(6), 818–826.
Xu, X., & Zhao, Y. (2010). Some economic facts of the prefabricated housing (Industry Report). Rutgers Business School, Newark.
Yeo, K. T., & Ning, J. H. (2002). Integrating supply chain and critical chain concepts in engineering-procure-construct (EPC) projects. International Journal of Project Management, 20, 253–262.
Zhao, Y., & Simchi-Levi, D. (2006). Performance analysis and evaluation of assemble-to-order systems with stochastic sequential lead-times. Operations Research, 54, 706–724.
Zipkin, P. (1991). Evaluation of base-stock policies in multiechelon inventory systems with compound-Poisson demands. Naval Research Logistics, 38, 397–412.
Zipkin, P. (2000). Foundations of inventory management. Boston: McGraw Hill.
Acknowledgements
We are grateful for the editor and referees for their constructive comments and suggestions that have helped us improve this paper. This work is supported by grant CMMI No. 0747779 from the National Science Foundation.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Xu, X., Zhao, Y. & Chen, CY. Project-driven supply chains: integrating safety-stock and crashing decisions for recurrent projects. Ann Oper Res 241, 225–247 (2016). https://doi.org/10.1007/s10479-012-1240-0
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10479-012-1240-0