Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry

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Mathematical Problems in EngineeringVolume 2013 2013, Article ID 657641, 9 pages
Research Article
Department of Management Science, College of Management, Shenzhen University, Shenzhen 518060, China
School of Economics and Management, Southeast University, Nanjing 210096, China
School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Received 29 December 2012; Accepted 16 January 2013
Academic Editor: Tsan-Ming Choi
Copyright © 2013 Lijun Ma et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
Traditional inventory models focus on operational decisions and inventory control. Quite few models consider the financial constraint and decision bias such as loss aversion, which are the reality in today-s business environment, especially for the fashion and textiles industry. In this paper we study the inventory control problem for a loss-averse retailer with financial constraint for operations in a periodic review setting in a finite horizon. We characterize the optimal inventory control policies with self-financing or with borrowing as capital-dependent base-stock policies. We demonstrate with numerical examples that the optimal base-stock level is nonincreasing in the accumulated wealth and the loss-aversion indicator.
Autor: Lijun Ma, Weili Xue, Yingxue Zhao, and Xudong Lin
Fuente: https://www.hindawi.com/