The University of Southampton
University of Southampton Institutional Repository

Holding costs under push or pull conditions - the impact of the Anchor Point

Record type: Article

Holding costs are traditionally determined from the investment in physical stock during a cycle. An alternative approach instead derives holding costs from Net Present Value (NPV) functions. It is known that applying both frameworks to the same system can lead to different holding cost valuations, but little explanation has been offered. By introducing the Anchor Point in a model, this paper shows, for four different systems, that traditional holding cost models (implicitly) assume pull conditions, while current NPV approaches model push conditions. This explains in part the differences between the methods. It is shown that the Anchor Point concept allows the construction of NPV models under pull conditions, giving results in better correspondence with traditional models. The traditional framework is restricted to pull conditions and important considerations could be easily overlooked, leading to wrong valuations of holding costs. NPV seems superior as such considerations are automatically incorporated. The application to multi-echelon inventory systems provides interesting insights on the roles of echelon stocks and lead-times, and offers potential for future research.

Full text not available from this repository.

Citation

Beullens, Patrick and Janssens, Gerrit K. (2011) Holding costs under push or pull conditions - the impact of the Anchor Point European Journal of Operational Research, 215, (1), pp. 115-125. (doi:10.1016/j.ejor.2011.06.005).

More information

Published date: 2011
Organisations: Operational Research

Identifiers

Local EPrints ID: 205833
URI: http://eprints.soton.ac.uk/id/eprint/205833
ISSN: 0377-2217
PURE UUID: 373ad5ac-4c16-4818-abb6-58e19d0c0479

Catalogue record

Date deposited: 14 Dec 2011 09:38
Last modified: 18 Jul 2017 11:04

Export record

Altmetrics

Contributors

Author: Gerrit K. Janssens

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×