Analytical study and cost modeling of secondary aluminum consumption for alloy producers under uncertain demands

A series of case studies on raw materials inventory strategy for both wrought and cast aluminum alloy productions were conducted under recourse-based modeling framework with the explicit considerations of the demand uncertainty compared to the traditional strategy based on point forecast of future demand. The result shows significant economic and environmental benefits by pre-purchasing excess amount of cheaper but dirtier secondary raw materials to hedge the riskier higher-than-expected demand scenario. Further observations demonstrate that factors such as salvage value of residual scraps, cost advantage of secondary materials over primary materials, the degree of the demand uncertainty, etc. all have direct impacts on the hedging behavior. An analytical study on a simplified case scenario suggested a close form expression to well explain the hedging behavior and the impacts of various factors observed in case studies. The thesis then explored the effects of commonality shared by secondary materials in their application in multiple final products. Four propositions were reached.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Materials Science and Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Li, Yaoqi

Advisor dc:contributor.advisor

• Randolph Kirchain.

• Materials Science and Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/44422

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/44422