Nippon Steel modeled ship arrivals to cut iron-ore yard inventory 14%

Nippon Steel imports more than 100 million tons of iron ore and coal annually by vessels from Australia, Brazil, Canada and other countries. Once unloaded, the material is stored in yards of limited capacity; when a yard is full, ships wait and run up demurrage costs.

The conventional fix is bigger yards or blanket safety stock. The team instead modeled the probability distribution of ship arrival intervals, treating arrivals to all mills as a nonhomogeneous Poisson process and arrivals at each mill as a Gamma process, so inventory targets reflected how supply gaps actually arrive, including seasonal shocks such as cyclones in Australia.

The model cut inventory levels by 14% in summer and 6% in winter without raising shortage risk, easing yard congestion and demurrage while keeping blast furnaces fed.