Analysis of purchasing activity with discounted cash flow inventory models

  • Gyöngyi Vörösmarty
    Affiliation

    Corvinus University of Budapest Department of Logistics and Supply Chain Management 1093 Budapest Fővám tér 8.

  • Imre Dobos
    Affiliation

    Corvinus University of Budapest Department of Logistics and Supply Chain Management 1093 Budapest Fővám tér 8.

Abstract

The classical economic order quantity model has two types of costs: ordering and inventory holding costs. In this paper we try to investigate the effect of purchasing activity on cash flow of a firm. In the examinations we use a cash flow identity similar to that of in inventory modeling. In our approach we analyze the purchasing and ordering process with discounted costs. The cost function of the model consists of linear cash holding, linear opportunity cost of spending cash, and linear interest costs. We show the optimal solution of the proposed model. The optimal solutions will be presented by numerical examples.
Keywords: Net present value, discounted cash flow, cash balance problem, inventory models, purchasing
Published online
2013-12-20
How to Cite
Vörösmarty, G., Dobos, I. (2013) “Analysis of purchasing activity with discounted cash flow inventory models”, Periodica Polytechnica Social and Management Sciences, 21(2), pp. 67-70. https://doi.org/10.3311/PPso.7085
Section
Articles