RT info:eu-repo/semantics/article
T1 An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment
A1 Pando Fernández, Valentín
A1 San José Nieto, Luis Augusto
A1 Sicilia Rodríguez, Joaquín
K1 EOQ models
K1 return on investment maximization
K1 stock-dependent demand rate
K1 minimizing average inventory cost per item
AB 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 holdingcost. A new approach focused on maximizing the return on investment (ROI) is used to determinethe optimal policy. It is proved that maximizing profitability is equivalent to minimizing the averageinventory cost per item. The global optimum of the objective function is obtained, proving thatthe zero ending policy at the final of a cycle is optimal. Closed expressions for the lot size and themaximum ROI are determined. The optimal policy for minimizing the inventory cost per unit time isalso obtained with a zero-order point, but the optimal lot size is different. Both solutions are not equalto the one that provides the maximum profit per unit time. The optimal lot size for the maximumROI policy does not change if the purchasing cost or the selling price vary. A sensitivity analysis forthe optimal values regarding the initial parameters is performed by using partial derivatives. Themaximum ROI is more sensitive regarding the selling price or the purchasing cost than regardingthe other parameters. Some useful managerial insights are deduced for decision-makers. Numericalexamples are solved to illustrate the obtained results.
YR 2021
FD 2021
LK https://uvadoc.uva.es/handle/10324/72862
UL https://uvadoc.uva.es/handle/10324/72862
LA eng
NO Mathematics 2021, 9, 844
DS UVaDOC
RD 06-abr-2025