Commodity Futures: An Important Role In Inventory Management
Main Article Content
Keywords
commodity futures, inventory management, EOQ model
Abstract
In a production environment costs of raw material inventories can vary dramatically thereby affecting inventory holding costs. Thus savings achieved through the implementation of the results of an EOQ model, which assumes stable inventory costs, may not be applicable where these costs vary. This paper addresses this problem by demonstrating how to integrate the commodity futures markets into an inventory control decision in order to help stabilize the price of inputs.
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