EURO 2024 Copenhagen
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1314. Integrating and evaluating value-oriented decision making mechanisms into inventory policies

Invited abstract in session WA-45: Decision Support for Operations Management, stream Decision Support Systems.

Wednesday, 8:30-10:00
Room: 30 (building: 324)

Authors (first author is the speaker)

1. Philipp Erfurth
Professur BWL - Produktionsmanagement, TU Chemnitz
2. Matthias Gerhard Wichmann
BWL - Produktionsmanagement, Technische Universität Chemnitz

Abstract

In multi-period inventory management, decisions are made about the timing and quantity of purchases, as well as inventory control of the goods. To minimize costs, inventory policies are used for the procurement of goods. Most policies assume constant purchase prices and stochastic demand. However, products and services are often subject to price fluctuations. This raises three challenges: (1) the economic advantage of inventory policies when purchase prices fluctuate, (2) the integration of value-oriented decision mechanisms into inventory policies, and (3) their comparison. To address these issues, a simulation study on inventory policies was conducted taking value orientation and fluctuating purchase prices into account. The study focusses on developing, integrating, and evaluating value-oriented inventory policies for goods with fluctuating prices. It compares their performance with conventional inventory policies. The results suggest that integrating value-oriented decision mechanisms can yield benefits even with minor price fluctuations in the market. As price fluctuations increase and solution robustness becomes more important, the need to integrate value-oriented decision mechanisms into inventory policies remains. The results indicate that value-oriented inventory policies can leverage cost potential by up to 20%. Therefore, further research is needed to efficiently configure these policies for the economical procurement and storage of goods during price fluctuations.

Keywords

Status: accepted

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