An intelligent approach for managing materials purchasing in the RMC industry

Abstract

A model for comparing the inventory costs of purchasing under the economic order quantity (EOQ) system and the just-intime (JIT) order purchasing system in existing literature concluded that JIT purchasing was virtually always the preferable inventory ordering system especially at high level of annual demand. By expanding the classical EOQ model, this paper shows that it is possible for the EOQ system to be more cost effective than the JIT system once the inventory demand approaches the EOQ-JIT cost indifference point. The intelligent agent paradigm, a natural fit to solve dynamic materials control problem, however has seldom been deployed in construction material management. Based on the EOQ-JIT cost indifference point function, an alternative agent based inventory management system is thus developed. A case study demonstrates how the equation affects the purchasing approach of a material.