Adjustable Robust Optimization Model for Construction Material Procurement Considering Two-Way Claims Under Price and Demand Uncertainty

Abstract

The dual uncertainty of construction material price and demand, which is a multiplication of uncertainties, magnifies the level of cost uncertainty. Moreover, the shortage cost of construction material is related to the project period, affecting the tradeoff between capital utilization and stockout. Therefore, considering the dual uncertainties of supply price and demand, this article constructs a multistage adjustable robust optimization model to determine the optimal construction material procurement strategy. The model also considers the two-way contract claim agreements between the contractor and the owner. This article further compares four scenarios—where both price and demand are known, price is known but demand is unknown, price is unknown but demand is known, and both price and demand are unknown—to analyze the impact of uncertainty on optimal cost. Furthermore, this article examines the effect of the degree of demand uncertainty and negotiated price on optimal cost and robust optimal procurement strategies. It could guide contractors in claim contract negotiations and procurement optimization in practical applications.