Procurement scheduling for complex projects with fuzzy activity durations and lead times

Material procurement is a vital activity for manufacturing complex products like ships and aircrafts with long manufacturing cycle times. The project activities are interlinked through numerous precedence and succession rules. Given these interdependencies, it is difficult to ascertain the durations of the activities precisely at planning stage and creates uncertainty in the requirement dates of the items. The lead times of items are also not known accurately and result in uncertainty in the availability dates. Consequently, inventory holding and shortage costs incurred cannot be crisply defined. The objective of this paper is to develop a procurement scheduling model considering the above uncertainties. We have developed a method to calculate fuzzy holding and shortage costs and used those as fuzzy cost coefficients in the procurement scheduling model. It minimizes the sum of the above costs under budget constraints and generates optimal ordering schedule. It is applied for procurement scheduling of a real ship building project. Two types of sensitivity analyses were performed: first to understand the effect of variation of degree of uncertainty on total cost and on stage budget requirements and second to study the effect of changes in allocated stage budget parameters on total cost. The results indicate that total cost can be reduced significantly if stage wise budgets are determined considering the uncertainties rather than allocating budget upfront and treating them as constraints. The sensitivity analyses performed, helps in identifying the most sensitive stage of the project and determine the ranges in which stage-wise budgets can be varied. (C) 2014 Elsevier Ltd. All rights reserved.