The convexities of the present value functions of all future cash outflows in inventory and credit

Abstract

In this paper, an inventory model under the conditions of permissible delay in payments and time value of money will be considered. The main purpose is to characterize and decide the behaviour and optimal inventory cycle time of the present value function of all future cash outflows. We explore the properties of the present value functions of all future cash outflows and show that they are convex. Bounds for the optimal inventory cycle time are provided. The bounds will be useful in search procedures for determining the optimal inventory cycle time.

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