Applying the methods of stock management optimisation in practice

Pupos, Tibor – Kis-Simon, Tünde – Pintér, Gábor – Kovács, Zoltán

Keywords: working capital, economic order quantity, holding cost (%), stock management models

The standard of stock management is always an important issue for the life of any company, chiefly because of the economic effects of stock management. There are numerous controversies in the findings published in the relevant literature, in the interpretation of concepts and in the practical application of the relevant correlations. They are often incomplete or incorrectly interpreted. This paper looks at methods and algorithms relevant to stock management that are unquestionably well-founded theoretically but the practical application of which raises various problems. These problems arise in the course of the practical application of certain stock management models, with respect to the interpretation of the economic meaning and the quantification of variables included in the various functions. The paper explains the importance of quantifying these variables, provides an interpretation of such variables in economic terms, identifies the issues arising in the course of their application in practice, and proposes algorithms for the quantification and practical application of such variables.

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