<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The main purpose of the paper is to present the relations between the different cost factors of the inventory management systems, and the context between the order quantities and the cost level. The theoretical approach of the model assumes a deterministic operational environment with planned shortages. We make the examination of the contexts by applying the ceteris paribus principle; we change only one cost factor from among the initial conditions at once and examine its effect on the cost level.</p><p>By using the economic order quantity with the planned shortage model, we can define the optimal order quantity, along which our stock management can be guaranteed by the most favourable cost level. The optimisation of the inventory level and the inventory management expenses together means an important factor in the competitiveness of the company. During the definition of the optimal inventory level of purchased parts, the purchasing and stock holding costs, and also the consequence of shortages play an important role. The presentation of the specific expense factors in each other’s function, and the representation of the onetime order expenses show their proportion compared to each other and the effect of their change on the total cost, and define the opportunities of the optimisation. The significance of the model is that it represents the level line of costs, the movement of the different cost factors in relation to others and their operating mechanism. Thus, it facilitates the representation of costs and the definition of the direction of optimisation.</p></abstract>

The main purpose of the paper is to present the relations between the different cost factors of the inventory management systems, and the context between the order quantities and the cost level. The theoretical approach of the model assumes a deterministic operational environment with planned shortages. We make the examination of the contexts by applying the ceteris paribus principle; we change only one cost factor from among the initial conditions at once and examine its effect on the cost level.By using the economic order quantity with the planned shortage model, we can define the optimal order quantity, along which our stock management can be guaranteed by the most favourable cost level. The optimisation of the inventory level and the inventory management expenses together means an important factor in the competitiveness of the company. During the definition of the optimal inventory level of purchased parts, the purchasing and stock holding costs, and also the consequence of shortages play an important role. The presentation of the specific expense factors in each other’s function, and the representation of the onetime order expenses show their proportion compared to each other and the effect of their change on the total cost, and define the opportunities of the optimisation. The significance of the model is that it represents the level line of costs, the movement of the different cost factors in relation to others and their operating mechanism. Thus, it facilitates the representation of costs and the definition of the direction of optimisation.

Context of the inventory management expenses in the case of planned shortages

József Hatvany Doctoral School for Information Science

Engineering Management in Production and Services

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Context of the inventory management expenses in the case of planned shortages"}

The main purpose of the paper is to present the relations between the different cost factors of the inventory management systems, and the context between the...

Context of the inventory management expenses in the case of planned shortages

Published Online: Mar 04, 2017

Page range: 26 - 35

Received: Sep 05, 2016

Accepted: Jan 30, 2017

DOI: https://doi.org/10.1515/emj-2017-0003

Keywords
cost factor, optimum, order quantity, purchasing, shortage, stock holding

© 2017 János Korponai et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Context of the inventory management expenses in the case of planned shortages

Published Online: Mar 04, 2017

Page range: 26 - 35

Received: Sep 05, 2016

Accepted: Jan 30, 2017

DOI: https://doi.org/10.1515/emj-2017-0003

Keywordscost factor, optimum, order quantity, purchasing, shortage, stock holding

© 2017 János Korponai et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
cost factor, optimum, order quantity, purchasing, shortage, stock holding