Artikel
Optimization of inventory holding cost due to price, weight, and volume of items
The inventory carrying cost has been assumed uniform for all products in an organization or a warehouse. This assumption is not valid for a diversified range of items in an organization or warehouse. This paper tested this hypothesis of variations in inventory holding costs in a warehouse in two industries based on the physical nature and the price of products. It is found that organizations with a wide variety of products need to calculate the inventory holding cost for each item (SKU) rather than using an average percentage cost of inventory. Inventory holding costs of items in two different organizations were calculated based on the various factors, including the actual cost of space due to the voluminous nature of the items with their existing inventory policies. A variation in inventory holding costs for each item was observed. The variation was small for an organization with homogeneous input costs, and it was large for a multi-product organization. The overall savings in the inventory holding cost due to adjusting the inventory policies through this methodology was found to be about 3%, which is significant for a big organization. This analysis will affect the decision the determining inventory carrying cost, inventory policies (e.g., stocking levels), and pricing policies (e.g., quantity discounts) for retail organizations.
- Language
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Englisch
- Bibliographic citation
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Journal: Journal of Risk and Financial Management ; ISSN: 1911-8074 ; Volume: 14 ; Year: 2021 ; Issue: 2 ; Pages: 1-11 ; Basel: MDPI
- Classification
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Wirtschaft
- Subject
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inventory
logistics
optimization
pricing
revenue management
transportation
- Event
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Geistige Schöpfung
- (who)
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Gurtu, Amulya
- Event
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Veröffentlichung
- (who)
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MDPI
- (where)
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Basel
- (when)
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2021
- DOI
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doi:10.3390/jrfm14020065
- Handle
- Last update
- 10.03.2025, 11:46 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Gurtu, Amulya
- MDPI
Time of origin
- 2021
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An inventory model for deteriorating items with time-dependent demand and time-varying holding cost under partial backlogging
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Cost of Holding Excess Reserves: The Indian Experience
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The "right" holding cost rates in average cost inventory models with reverse logistics
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Losses from cross-holdings in a duopoly with convex cost and strategic input price determination
An inventory model of instantaneous deteriorating items with controllable deterioration rate for time dependent demand and holding cost
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