Inventory Control Under Financial Turbulence

Lucy Gongtao Chen, Lawrence W. Robinson, Robin O. Roundy and Rachel Q. Zhang

Chapter 3 in Cross-Functional Inventory Research, 2016, pp 51-87 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In global supply chains, both the operational costs and discount factors of a firm can be strongly affected by unpredictable national and international economic forces. In this chapter, we investigate the impact of these financial uncertainties on inventory decisions by modeling the operational costs, discount factors, and demands as stochastic processes that evolve as financial uncertainties are realized over time. To illustrate the benefits of incorporating stochastic discount factors, we conduct a case study of four types of Mexican firms who conduct sizeable business with the U.S.With a discount factor model fitted to data, we conduct a numerical study and show that both the business type and the stockout protocol strongly affect the optimal inventory decisions, and that the cost penalty for ignoring the dynamic nature of the financial environment can exceed 36%.

Keywords: Inventory Management; Cross-Functional Approach; Business Strategy (search for similar items in EconPapers)
JEL-codes: M19 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789813144347_0003 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789813144347_0003 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813144347_0003

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().