Optimal Scheduling of Purchasing Orders for Large Projects

The completion of a typical project hinges upon receiving all the purchased components by thetime they are scheduled to be used. Some of these components may have long stochastic leadtimes, so the project manager is tempted to order them ASAP, to avoid the (usual) high penaltiesassociated with delays. (The penalties may be tangible or intangible, but we assume that theycan be measured by monetary units.) This in turn may bring about excessive inventory holdingcosts. Clearly an optimization is called for to minimize the total expected cost of the project.This is achieved by timing the orders optimally, for the one component case as well as for the ncomponent general case