Journal of the Korean Operations Research and Management Science Society (한국경영과학회지)

The Korean Operations Research and Management Science Society (한국경영과학회)
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Improving a Risk-Averse Price-Fluctuating Inventory Model by Reallocating Initial Inventories

구매가격 변동 하에서 초기재고 재분배를 통한 위험회피 재고모형의 효율화

  • 박찬규 (동국대학교 서울캠퍼스 경영학부)
  • Received : 2012.09.23
  • Accepted : 2013.04.22
  • Published : 2013.06.30
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Abstract

In traditional inventory models, purchase prices of raw materials are assumed to be fixed and have no effect on the optimal choice of inventory policies. However, when purchase prices fluctuate continuously over time, inventory costs are heavily affected by purchasing prices. Risk-averse inventory model decides order quantity and ordering time by considering not just purchase prices but also the risk from the discrepancy between estimated prices and realized prices. In this paper, we propose a myopic inventory policy which incorporates price risk into deciding ordering time and quantities. While the existing risk-averse model has no mechanism to reallocate inventories already purchased for a specific future period, the revised one reallocates initial inventories of each period to other future periods so that it can avoid purchasing raw materials at high prices. Experimental results demonstrate that the revised model outperforms the existing one in respect of total cost and variability.

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References

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