An analysis on production and inventory models with discounted cash-flows

Yousef Ghiami

Omega, 2023, vol. 117, issue C

Abstract: The objective function of an optimisation model is the main driver for obtaining optimal values for decision variables. An objective function that does not well represent an inventory or production-inventory setting might then mislead the decision maker. There are two well-established frameworks for constructing the objective function of inventory or production-inventory models in an economic context; namely the Net Present Value approach and the average cost/profit approach. In recent years, a variant of the Net Present Value approach has been introduced and used by researchers which is actually a combination of the two main approaches. The researchers, however, provide little justification for this approach and its analytical foundation. In this research, we compare this approach with the two known approaches both analytically and numerically. The results of our study show that, under some circumstances, the new approach significantly deviates from the other two in terms of the optimal values for the decision variables and objective function.

Keywords: Inventory; Production; Objective function; Discounted cash flow; Net present value (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048323000130
Full text for ScienceDirect subscribers only

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:eee:jomega:v:117:y:2023:i:c:s0305048323000130

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.omega.2023.102847

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().