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A computational model for inventory management and planning

Author

Listed:
  • Ayub, Mehar
  • Ahsanuddin, Muhammad

Abstract

The objective of the study is to determine the factors of the optimal level of merchandizing inventory. The study is based on a mathematical model. The results revealed some interesting findings. The most important conclusion is that the 'Usage of Material' or the Sales Volume is not the real determinate of the inventory volume. It is concluded in the model that the volume of inventories depends on the difference between the return on investment in the inventories and the rate of interest on short-term deposits. The traditional methods in cost accounting - Buffer Stock and Economic Order Quantity - have been reconciled with the profit maximization hypothesis.

Suggested Citation

  • Ayub, Mehar & Ahsanuddin, Muhammad, 2000. "A computational model for inventory management and planning," MPRA Paper 600, University Library of Munich, Germany, revised 2002.
  • Handle: RePEc:pra:mprapa:600
    as

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    File URL: https://mpra.ub.uni-muenchen.de/600/1/MPRA_paper_600.pdf
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    References listed on IDEAS

    as
    1. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June.
    2. Smith, Clifford Jr. & Watts, Ross L., 1992. "The investment opportunity set and corporate financing, dividend, and compensation policies," Journal of Financial Economics, Elsevier, vol. 32(3), pages 263-292, December.
    3. Smith, Janet Kiholm, 1987. " Trade Credit and Informational Asymmetry," Journal of Finance, American Finance Association, vol. 42(4), pages 863-872, September.
    4. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," Review of Economic Studies, Oxford University Press, vol. 25(2), pages 65-86.
    5. Mian, Shehzad L & Smith, Clifford W, Jr, 1992. " Accounts Receivable Management Policy: Theory and Evidence," Journal of Finance, American Finance Association, vol. 47(1), pages 169-200, March.
    6. Backus, David, et al, 1980. "A Model of U.S. Financial and Nonfinancial Economic Behavior," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(2), pages 259-293, Special I.
    7. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    8. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    9. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    10. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Inventory Control; Economic Order Quantity; Buffer Stock; Baumoul's Model; Optimization; Material Cost Accounting;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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