An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment

This work presents an inventory model for a single item where the demand rate is stock-dependent. Three fixed costs are considered in the model: purchasing cost, ordering cost and holding cost. A new approach focused on maximizing the return on investment (ROI) is used to determine the optimal polic...

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Autores: Pando Fernández, Valentín, San José Nieto, Luis Augusto, Sicilia Rodríguez, Joaquín
Tipo de recurso: artículo
Estado:Versión publicada
Fecha de publicación:2021
País:España
Institución:Universidad de Valladolid
Repositorio:UVaDOC. Repositorio Documental de la Universidad de Valladolid
OAI Identifier:oai:uvadoc.uva.es:10324/72862
Acceso en línea:https://doi.org/10.3390/math9080844
https://uvadoc.uva.es/handle/10324/72862
Access Level:acceso abierto
Palabra clave:EOQ models
return on investment maximization
stock-dependent demand rate
minimizing average inventory cost per item
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spelling An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on InvestmentPando Fernández, ValentínSan José Nieto, Luis AugustoSicilia Rodríguez, JoaquínEOQ modelsreturn on investment maximizationstock-dependent demand rateminimizing average inventory cost per itemThis work presents an inventory model for a single item where the demand rate is stock-dependent. Three fixed costs are considered in the model: purchasing cost, ordering cost and holding cost. A new approach focused on maximizing the return on investment (ROI) is used to determine the optimal policy. It is proved that maximizing profitability is equivalent to minimizing the average inventory cost per item. The global optimum of the objective function is obtained, proving that the zero ending policy at the final of a cycle is optimal. Closed expressions for the lot size and the maximum ROI are determined. The optimal policy for minimizing the inventory cost per unit time is also obtained with a zero-order point, but the optimal lot size is different. Both solutions are not equal to the one that provides the maximum profit per unit time. The optimal lot size for the maximum ROI policy does not change if the purchasing cost or the selling price vary. A sensitivity analysis for the optimal values regarding the initial parameters is performed by using partial derivatives. The maximum ROI is more sensitive regarding the selling price or the purchasing cost than regarding the other parameters. Some useful managerial insights are deduced for decision-makers. Numerical examples are solved to illustrate the obtained results.Este trabajo forma parte del proyecto de investigación: MTM2017-84150-P, which is co-financed by the European Community under the European Regional Development Fund (ERDF)2021info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfhttps://doi.org/10.3390/math9080844https://uvadoc.uva.es/handle/10324/72862reponame:UVaDOC. Repositorio Documental de la Universidad de Valladolidinstname:Universidad de ValladolidIngléshttps://www.mdpi.com/2227-7390/9/8/844info:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by-nc-nd/4.0/oai:uvadoc.uva.es:10324/728622026-06-13T12:44:47Z
dc.title.none.fl_str_mv An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
title An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
spellingShingle An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
Pando Fernández, Valentín
EOQ models
return on investment maximization
stock-dependent demand rate
minimizing average inventory cost per item
title_short An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
title_full An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
title_fullStr An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
title_full_unstemmed An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
title_sort An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
dc.creator.none.fl_str_mv Pando Fernández, Valentín
San José Nieto, Luis Augusto
Sicilia Rodríguez, Joaquín
author Pando Fernández, Valentín
author_facet Pando Fernández, Valentín
San José Nieto, Luis Augusto
Sicilia Rodríguez, Joaquín
author_role author
author2 San José Nieto, Luis Augusto
Sicilia Rodríguez, Joaquín
author2_role author
author
dc.subject.none.fl_str_mv EOQ models
return on investment maximization
stock-dependent demand rate
minimizing average inventory cost per item
topic EOQ models
return on investment maximization
stock-dependent demand rate
minimizing average inventory cost per item
description This work presents an inventory model for a single item where the demand rate is stock-dependent. Three fixed costs are considered in the model: purchasing cost, ordering cost and holding cost. A new approach focused on maximizing the return on investment (ROI) is used to determine the optimal policy. It is proved that maximizing profitability is equivalent to minimizing the average inventory cost per item. The global optimum of the objective function is obtained, proving that the zero ending policy at the final of a cycle is optimal. Closed expressions for the lot size and the maximum ROI are determined. The optimal policy for minimizing the inventory cost per unit time is also obtained with a zero-order point, but the optimal lot size is different. Both solutions are not equal to the one that provides the maximum profit per unit time. The optimal lot size for the maximum ROI policy does not change if the purchasing cost or the selling price vary. A sensitivity analysis for the optimal values regarding the initial parameters is performed by using partial derivatives. The maximum ROI is more sensitive regarding the selling price or the purchasing cost than regarding the other parameters. Some useful managerial insights are deduced for decision-makers. Numerical examples are solved to illustrate the obtained results.
publishDate 2021
dc.date.none.fl_str_mv 2021
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv https://doi.org/10.3390/math9080844
https://uvadoc.uva.es/handle/10324/72862
url https://doi.org/10.3390/math9080844
https://uvadoc.uva.es/handle/10324/72862
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv https://www.mdpi.com/2227-7390/9/8/844
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
rights_invalid_str_mv http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.format.none.fl_str_mv application/pdf
dc.source.none.fl_str_mv reponame:UVaDOC. Repositorio Documental de la Universidad de Valladolid
instname:Universidad de Valladolid
instname_str Universidad de Valladolid
reponame_str UVaDOC. Repositorio Documental de la Universidad de Valladolid
collection UVaDOC. Repositorio Documental de la Universidad de Valladolid
repository.name.fl_str_mv
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