The combined effects of interest and inflation rates on inventory systems: A comparative analysis across countries

Amir Khakbaz, Walid Mensi, Erfan Babaee Tirkolaee, Shawkat Hammoudeh and Vladimir Simic

International Journal of Production Economics, 2023, vol. 266, issue C

Abstract: Interest and inflation rates are among the most important economic indicators of any country. Inventory management is also known as one of the most critical components of supply chains and logistics systems. This study conducts a comparative study to analyze the combined effects of interest and inflation rates on inventory systems in different countries as part of macroeconomics. To do so, a novel inventory model is developed by accounting for interest rate, inflation, and increasing linear demand over time which affect inventory costs. In terms of the main parameters, the developed model is divided into two groups, where each group is solved separately. The results demonstrate that Venezuela, Sudan, Zimbabwe, Iran, and Liberia are the five countries with the most potential volume of hoarding of goods. These countries should increase their interest rates by at least 118.06%, 22.42%, 7.84%, 10.84%, and 6.94%, respectively, to counter the increasing amount of hoarding. Moreover, the findings reveal that Venezuela, Zimbabwe, Iran, Sudan, and Turkey, have the highest cost of inventory systems.

Keywords: Inventory systems; Golden interest rate; Inflation rate; Hoarding; Inventory costs (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:266:y:2023:i:c:s0925527323002670

DOI: 10.1016/j.ijpe.2023.109035

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