• Journal of Digital Convergence
• /
• v.11 no.12
• /
• pp.265-274
• /
• 2013

The business cycle during a recession leads to negative effects on raising funds and operations management of company. In particular, the company with many inventories in the recession causes liquidity problem. Which leads to frustration in the competitive strategy management. In this case the company experiencing cash or liquidity problems attempts to reduce its investment in inventory. However, reducing inventory investment makes problems to increase inventory operating costs. This paper presents sensitivity of total cost compared to the size for reducing inventory investment. This will guarantee the relevance of the reducing inventory investment. Optimal Inventory levels also may be required to be less than the optimal levels without reduction on inventory investments.