Uncertainty assessment for the supply chain system of a concrete company using Monte Carlo Simulation.

2021-2
Serbest, İnanç Taha
Concrete is the primary construction material and may be supplied in varying strength values according to customer demand. The profitability of concrete operations is very low, with a profit margin changing between 0.1 and 0.2 percent (OYAK Concrete Company, 2019). Since multiple competitors are generally available for the sales region, it is not always likely to raise up the concrete prices. Therefore, operation profitability for concrete production and distribution systems may be achieved practically by monitoring and diminishing operating cost items. On this basis, transportation-related cost items in hauling operations cover about 70% of the total operating cost, and where half of this cost consists of fuel consumption. Truck-mixers are used in material hauling operations and may carry concrete from batching plants to construction site with a varying vehicle capacity of 7, 8, 9, 10, 12, and 14 m3. The current study intends to evaluate the uncertainties in the concrete supply-chain systems. At this point, the OYAK Concrete Company’s operations in Ankara, where four different batching plants are used actively, were considered in the application part. It is observed from the recent records of the company that an annual concrete production of 4.5 million m3 where truck-mixers should have 500,000 travels between the batching plants and the order points. When matching the order points and the supplier plant, the priority zone regarding destination lengths is evaluated. However, raw material costs used in the batching plants and transportation costs may differ between plants. Therefore, the priority zone may fail to ensure the highest profitability in all cases. Using the demand and supply uncertainties in different types of concrete and priority zones, the current study tries to build up a Monte Carlo simulation model to seek alternative supply chain scenarios to increase operational profitability. The results of the study show that operational cost could be decreased by changing distribution system. Main impact of the decrease is seen in transportation cost of the operations.
Citation Formats
İ. T. Serbest, “Uncertainty assessment for the supply chain system of a concrete company using Monte Carlo Simulation.,” M.S. - Master of Science, Middle East Technical University, 2021.