An Integreted Inventory Model For Value-added Items

Value-added items,as known as invisible ameliorating items,don’t change significantly in the quantity during storage,but their value increases over time,specifically in the form of an increase in price,such as liquor,wine,etc.For such items,under the circumstance of financial constraints and limited inventory capacity,how to formulate a reasonable replenishment plan and production and sales plan to continuously improve items’ value while seizing market opportunities,and take into account inventory cost and capacity,to achieve Maximizing corporate profits is critical.In this context,the master thesis takes value-added items such as liquor as the research object,constructs the value-added rate function and the demand rate function for this item through empirical research.Considering factors such as capital constraints,inventory capacity and inflation,the master thesis builds an integrated inventory model from the production and storage of raw wine to the production and sales of finished wine with the goal of Maximizing the manufacturer’s profit.It can provid some theoretical basis and practical guidance for the production and inventory decision of value-added items.Firstly,the literature review and comment are carried out on the three types of inventory control models of value-added items,demand characteristics and integrated inventory in the category of inventory management and enterprise decision-making under capital constraints.Then the value-added rate,value function and demand function of value-added items are analyzed and assumed according to the concept and characteristics of the items and market research data.Secondly,on the basis of the above assumptions,taking W liquor manufacturing enterprise as an example,considering capital constraints,storage capacity and other conditions,an integrated inventory model of multiple raw wine and finished wine for the manufacturer is established to seek the optimal production plan and storage strategies of raw wine,and the optimal production and sales plan of finished wine.The algorithm design is carried out by using the principle of dynamic programming,and the numerical example is solved and the sensitivity analysis is carried out through numerical experiments.The results show that the results of the model are most sensitive to the shape parameters of the value-added rate of raw wine,and the manufacturer can increase profits by accelerating the technology of items’ value-added rate.When the demand rate of finished wine increases rapidly with the selling price,the manufacturer can appropriately increase the initial capital to ensure production.On the contrary,the manufacturer needs to expand the maximum storage capacity,extend the storage and value-added period of raw wine,so as to produce higher-value finished wine.Finally,a new inventory model is established considering the time value of capital when the raw wine adopts a dynamic batch production plan,and the optimal solution in the two cases is compared and analyzed,so as to provide reasonable reference suggestions for the maximization of corporate profits.The study found that,compared with the fixed batch production strategy,the dynamic batch production strategy can increase the average value of raw wine while playing a role in destocking,and the total output and sales price of the final finished wine are also higher,which leading to the increase of sales revenue.On the other hand,time value of capital has a greater impact on the decision-making of manufacturer.In order to reduce the impact of inflation,the manufacturer prefer to increase capital investment and expand inventory capacity in the early stage,and produce sufficient quantities of raw wine to provide bigger storage value-added space.At the same time,the manufacturer should produce more finished wine to accelerat the return of capital and improve the present value of manufacturer’s profits.The research not only enriches the theoretical research on the inventory model of value-added items,but also expands the application of dynamic programming principles to complex models,and provides ideas for manufacturer to make production inventory decisions of value-added items.