A Value-Oriented Framework for Inventory Management

Abstract:     
The basic financial purpose of a firm is to maximize its value. An inventory management system should also contribute to the realization of this basic aim. Many current asset management models found in financial management literature were constructed with the assumption of book profit maximization as their basic aim. However these models could lack the means for realizing a different aim, i.e., the maximization of enterprise value. This article presents a modified value-based inventory management model.

Number of Pages in PDF File: 12

Keywords: inventory management, value-based management, free cash flow, working capital management, short-run financial management

JEL Classification: G32, G11, M11, D81, O16, P33, P34

Accepted Paper Series