Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry

Traditional inventory models focus on operational decisions and inventory control. Quite few models consider the financial constraint and decision bias such as loss aversion, which are the reality in today's business environment, especially for the fashion and textiles industry. In this paper w...

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Main Authors:	Lijun Ma, Weili Xue, Yingxue Zhao, Xudong Lin
Format:	Article
Language:	English
Published:	Hindawi Limited 2013-01-01
Series:	Mathematical Problems in Engineering
Online Access:	http://dx.doi.org/10.1155/2013/657641

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spelling	doaj-501bbefa54f943b090ffaca559eb2b1f2020-11-24T22:43:08ZengHindawi LimitedMathematical Problems in Engineering1024-123X1563-51472013-01-01201310.1155/2013/657641657641Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles IndustryLijun Ma0Weili Xue1Yingxue Zhao2Xudong Lin3Department of Management Science, College of Management, Shenzhen University, Shenzhen 518060, ChinaSchool of Economics and Management, Southeast University, Nanjing 210096, ChinaSchool of International Trade and Economics, University of International Business and Economics, Beijing 100029, ChinaDepartment of Management Science, College of Management, Shenzhen University, Shenzhen 518060, ChinaTraditional inventory models focus on operational decisions and inventory control. Quite few models consider the financial constraint and decision bias such as loss aversion, which are the reality in today's business environment, especially for the fashion and textiles industry. In this paper we study the inventory control problem for a loss-averse retailer with financial constraint for operations in a periodic review setting in a finite horizon. We characterize the optimal inventory control policies with self-financing or with borrowing as capital-dependent base-stock policies. We demonstrate with numerical examples that the optimal base-stock level is nonincreasing in the accumulated wealth and the loss-aversion indicator.http://dx.doi.org/10.1155/2013/657641
collection	DOAJ
language	English
format	Article
sources	DOAJ
author	Lijun Ma Weili Xue Yingxue Zhao Xudong Lin
spellingShingle	Lijun Ma Weili Xue Yingxue Zhao Xudong Lin Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry Mathematical Problems in Engineering
author_facet	Lijun Ma Weili Xue Yingxue Zhao Xudong Lin
author_sort	Lijun Ma
title	Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry
title_short	Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry
title_full	Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry
title_fullStr	Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry
title_full_unstemmed	Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry
title_sort	loss-averse inventory and borrowing decisions with constraints on working capital in fashion and textiles industry
publisher	Hindawi Limited
series	Mathematical Problems in Engineering
issn	1024-123X 1563-5147
publishDate	2013-01-01
description	Traditional inventory models focus on operational decisions and inventory control. Quite few models consider the financial constraint and decision bias such as loss aversion, which are the reality in today's business environment, especially for the fashion and textiles industry. In this paper we study the inventory control problem for a loss-averse retailer with financial constraint for operations in a periodic review setting in a finite horizon. We characterize the optimal inventory control policies with self-financing or with borrowing as capital-dependent base-stock policies. We demonstrate with numerical examples that the optimal base-stock level is nonincreasing in the accumulated wealth and the loss-aversion indicator.
url	http://dx.doi.org/10.1155/2013/657641
work_keys_str_mv	AT lijunma lossaverseinventoryandborrowingdecisionswithconstraintsonworkingcapitalinfashionandtextilesindustry AT weilixue lossaverseinventoryandborrowingdecisionswithconstraintsonworkingcapitalinfashionandtextilesindustry AT yingxuezhao lossaverseinventoryandborrowingdecisionswithconstraintsonworkingcapitalinfashionandtextilesindustry AT xudonglin lossaverseinventoryandborrowingdecisionswithconstraintsonworkingcapitalinfashionandtextilesindustry
_version_	1725697411715694592

Loss-Averse Inventory and Borrowing Decisions with Constraints on Working Capital in Fashion and Textiles Industry

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