Optimization of trading and purchasing policies in the market of the construction material

Abstract

In the present research, the authors’ attention is concentrated on the methodological fundamentals of surveying the situation on the construction material market using mathematical analysis methods, the model of “Profitability – Risk” in particular. The significance of the paper under consideration is conditioned by a great value share of construction materials in the integrated capital of an investment construction project and by the necessity to make the dependence on imported construction materials lower. The construction material market regulation and its conditioning oriented at its more effective functioning are to affect the construction field favourably. The information received in the process of analysis with regard to a retrospective information is to become a reference basis in managerial decision making. The objectives to be achieved on managerial decisions making depend on the quality of the reference information. A mathematical algorithm for studying a retrospective information on constructive material value is offered in the paper under consideration along with the analysis of other factors. The algorithm has been worked out basing on the portfolio theory concepts. While gestating the offered algorithm practically, construction materials were ranged to form groups, and following that, several types of materials were defined for each group. In the process of the analysis, a number of items were calculated: yearly price changes, expected average price changes and root-square deviations as risk level indicators and an average values ratio in a price movement to the corresponding risks. Besides, some groups of materials were identified as having considerable value fluctuations. The reasons of their fluctuations having been revealed, the most cost-effective and mostly exposed to risk groups of construction materials were indicated as being mostly on demand in the home markets. The offered recommendations are the result of the investigation and are meant for main participants of the construction material market, such as the government, construction material producers and developers engaged in organizing and planning their activities in the sphere of investment-construction project realization.