This paper describes a simulation-based approach for planning material laydown yards for steel fabrication projects. The classic approach to material placement is the “reactive approach,” whereby as material arrives, the yard foreman decides, based on few rules and his/her past experience, where to place everything. It's often fraught with uncertainty resulting from imprecise and difficult-to-forecast construction consumption schedules, resource interactions, and supply chain issues, especially in material delivery. This paper outlines an approach to optimize reactive placement policy using heuristics, genetic algorithms and simulation to model material movement from laydown areas to the consumption unit. The novel approach combines analytical tools and heuristics to model the dynamic nature of material management. The paper compares this integrated approach with commonly-used optimization techniques which use weighted target functions based on rule of thumb. A case study demonstrates the suitability and efficiency of the proposed optimization method in reactive laydown yard management.