×

On the purchase-inventory decision under inflation. The present value approach. (English) Zbl 0691.90020

Summary: Though the economic order quantity method is being widely used in the majority of inventory decisions, it does not reflect the inflation, which has been in the high range from 8 % to 20 % in the 1970’s, and the time value of the money has been affected by the inflation significantly. Therefore, it may not match the actual realities. In this paper, the analytic models will be established by using the present worth approach and taking account of the inflation. In general, the optimal procurement quantity derived by the present value models is less than the quantity determined by the EOQ formula, but the latter is a best approximate value of the former, under the situations that the interest rate and inflation rate are low.

MSC:

90B05 Inventory, storage, reservoirs
91B24 Microeconomic theory (price theory and economic markets)
PDFBibTeX XMLCite