Evaluation of Value-Oriented Inventory Policies with Fluctuating Purchase Prices

In multi-period inventory management, decisions are made about procurement timing and quantities as well as on inventory control of goods. To strive for cost minimization, for B and C goods procurement companies apply inventory policies. A major assumption of most policies are constant purchase prices and stochastic demand. Today, however, products and services often experience price fluctuations. This raises two challenges: (1) The economic advantage of conventional inventory policies in presence of fluctuating purchase prices, and (2) the integration of value orientation into inventory policies. To address these questions, a simulation study is conducted with fluctuating purchase prices, including value-oriented aspects. The study focuses on developing inventory policies for goods with fluctuating prices and comparing their performance to conventional policies. The simulation evaluates the degree of demand and price fluctuation, demonstrating that value-oriented extensions improve performance and solution robustness as price fluctuation increases. These findings highlight the need for further research on efficient configuration of value-oriented inventory policies for economically procuring and storing goods during price fluctuations.