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Economic Analysis: Theory and Practice
 

A multi-product model to manage inventory with even frequency of delivery

Vol. 14, Iss. 40, OCTOBER 2015

PDF  Article PDF Version

Received: 9 July 2015

Received in revised form: 12 August 2015

Accepted: 28 September 2015

Available online: 30 October 2015

Subject Heading: MATHEMATICAL METHODS AND MODELS

JEL Classification: 

Pages: 55-66

Mitsel' A.A. National Research Tomsk Polytechnic University, Tomsk State University of Control Systems and Radioelectronics, Tomsk, Russian Federation
maa@asu.tusur.ru

Alimkhanova D.A. National Research Tomsk Polytechnic University, Tomsk, Russian Federation
dada93@mail.ru

Subject Inventory management in retail business enables to curb expenditure, increase profits and release the working capital. Material procurement under conditions of tight resources continues to be significant, despite abundant literature on the subject. The study focuses on the developing a model enabling to build up inventories and provide more cost savings as compared to the model by the Kulakovs.
     Objectives The objectives are to build a multi-product model to manage inventory with even and discretionary frequency of delivery and minimum working capital, to analyze and compare it with the Kulakovs' model, and to perform the model testing based on real data.
     Methods We assume that at the beginning of the cycle, only the first resource is purchased in full, others only partially, with subsequent additional purchasing during the cycle. The model's basis is accounting equations at the initial point and at additional purchases of required resources.
     Results We have built a multi-product model of inventory management with even and discretionary frequency of delivery. We compare it with the Kulakovs' model and test on real data of TOO SP VG-Plast Company (Semei, Republic of Kazakhstan).
     Conclusions
The offered model allows saving up to 30% of working capital versus the Kulakovs' model. The normalizing coefficient's limit value under our model is 0.368, whereas under the Kulakovs' model, it is 0.5. The test shows that using our model to buy additional resources within the cycle results in up to 50% of saved current assets.

Keywords: working capital, inventory management, multi-product model, optimization, minimization

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