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

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.

Keywords

• cost factor
• optimum
• order quantity
• purchasing
• shortage
• stock holding