The new approach to inventory optimisation
by Gennady L. Brodetskiy
International Journal of Logistics Systems and Management (IJLSM), Vol. 22, No. 3, 2015

Abstract: There is a hidden reserve for improving the efficiency of supply chains at inventory management. The aim of this research is to develop a special approach for optimisation of such systems with regard to the time value of money (TVM) according to the scheme of simple interest, and to modify the EOQ formula respectively. It is caused by the fact that in such models profits are not used to increase the total annual supply, and the interest rate for the calculation of the TVM should reflect the effectiveness of cash flow of supply chain itself. A new formula considering the TVM for EOQ is found. The analytical assessment of the interest rate, which characterises the supply chain efficiency and is applied in calculations with the use of the generalised EOQ formula, is given. The developed method allows to receive additional synergy effect the increase in profitability of a working capital.

Online publication date: Thu, 08-Oct-2015

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