An Application of Newsvendor Model on Pipe Stringing Operations of a Gas Pipeline Construction Project

Yuqiang Wei, Chenggong Feng, Shunichi Ohmori, Arnat Watanasungsuit, Choosak Pornsing, Kawinthorn Saichareon*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

With the increasingly fierce market competition, enterprises must maintain their invincible position through continuous improvement, innovation, and optimization of their operations to save cost and maximize profit. In this article, the authors introduce a resource allocation technique for a long-distance gas pipeline construction project. Through the introduction of the newsvendor model, the optimal resource allocation,workforce, and equipment, on the pipeline stringing operations, which makes the welding crew perform its functions are the crucial tactic of the operation manager. The idea of this study is to adopt the concept of the newsvendor model for trading between overstock cost and understock cost of gas pipe transportation management. The result of applying has shown that the model provided the optimal control of the pipeline stringing operation in which concern to the uncertainty of relevant factors. In this case study, the total cost is $760.13 per day compared to the total cost of the traditional method, delivering the pipes at an average quantity, which is $1,587.22 per day. As a result, the newsvendor model could save the company money by 52.11% on supply chain and logistics operations. Furthermore, the newsvendor model does not only provide a simple optimization technique but also shows a guide to businesses to think about applying other optimization tools to their business processes and manufacturing processes.

Original languageEnglish
Title of host publicationICCMB 2022 - 2022 5th International Conference on Computers in Management and Business
PublisherAssociation for Computing Machinery
Pages180-184
Number of pages5
ISBN (Electronic)9781450387422
DOIs
Publication statusPublished - 2022 Jan 21
Event5th International Conference on Computers in Management and Business, ICCMB 2022 - Virtual, Online, Singapore
Duration: 2022 Jan 212022 Jan 23

Publication series

NameACM International Conference Proceeding Series

Conference

Conference5th International Conference on Computers in Management and Business, ICCMB 2022
Country/TerritorySingapore
CityVirtual, Online
Period22/1/2122/1/23

Keywords

  • base-stock policy
  • gas pipeline
  • newsvendor model
  • petroleum industry
  • supply chain and logistics operations

ASJC Scopus subject areas

  • Human-Computer Interaction
  • Computer Networks and Communications
  • Computer Vision and Pattern Recognition
  • Software

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