RT info:eu-repo/semantics/article
T1 Profitability ratio maximization in an inventory model with stock-dependent demand rate and non-linear holding cost
A1 Pando Fernández, Valentín
A1 San José Nieto, Luis Augusto
A1 Sicilia Rodríguez, Joaquín
K1 Inventory management
K1 Profitability ratio maximization
K1 Stock-dependent demand rate
K1 Non-linear holding cost
K1 12 Matemáticas
AB This paper studies a deterministic inventory model with a stock-dependent demand pattern where the cumulative holding cost is a non-linear function of both time and stock level. When the monetary resources are limited and the inventory manager can invest his/her money in buying different products, it seems reasonable to select the ones that provide a higher profitability. Thus, a new approach with the aim of maximizing the profitability ratio (defined as the profit/cost quotient) is considered in this paper. We prove that the profitability ratio maximization is equivalent to minimizing the inventory cost per unit of an item. The optimal policy is obtained in a closed form, whose general expression is a generalization of the classical EOQ formula for inventory models with a stock-dependent demand rate and a non-linear holding cost. This optimal solution is different from the other policies proposed for the problems of minimum cost or maximum profit per unit time. A complete sensitivity analysis of the optimal solution with respect to all the parameters of the model is developed. Finally, numerical examples are solved to illustrate the theoretical results and the solution methodology.
PB Elsevier
SN 0307-904X
YR 2019
FD 2019
LK https://uvadoc.uva.es/handle/10324/65885
UL https://uvadoc.uva.es/handle/10324/65885
LA eng
NO Applied Mathematical Modelling, February 2019, vol. 66, p. 643-661
NO Producción Científica
DS UVaDOC
RD 13-may-2024