This presentation examines a critical materials management problem encountered in large-scale projects. Specifically, we divide the construction of a facility into two distinct phases: a "construction" phase, and an "ongoing" phase.
We consider an item which possesses uncertainty regarding total requirements during the construction phase, and ongoing (but not necessarily constant) operational usage during the subsequent phase. After construction completion, surplus units of stock may be salvaged (third-party sale, return to supplier, etc.).
We analytically model the respective acquisition and disposal decisions. We illustrate how non-constant marginal salvage values and additional construction projects at later (random) points in time affect optimal solutions.
This analysis is being carried out within the context of NOVA's Alberta Gas Trunkline Division, the largest gas transmission company in Alberta. We examine the framework in which these decisions are made, and address issues of practical, managerial relevance.