Optimal cycle time and inventory decisions in coordinated and non-coordinated two-echelon inventory system under inflation and time value of money

2016 ◽  
Vol 54 (9) ◽  
pp. 2709-2730 ◽  
Author(s):  
Dega Nagaraju ◽  
A. Ramakrishna Rao ◽  
S. Narayanan ◽  
P. Pandian
Keyword(s):  
Cycle Time ◽  
Inventory System ◽  
Time Value Of Money ◽  
Time Value ◽  
Inventory Decisions ◽  
Value Of Money

Inventory and Credit Decisions Under Inflationary Conditions With Inflation Induced Bad-Debts

2018 ◽  
Vol 9 (3) ◽  
pp. 52-76
Author(s):  
K.K. Aggarwal ◽  
Arun Kumar Tyagi
Keyword(s):  
Default Risk ◽  
Time Value Of Money ◽  
Credit Period ◽  
Time Value ◽  
Joint Determination ◽  
Proposed Model ◽  
Net Profit ◽  
Inventory Decisions ◽  
Value Of Money

This article describes how a credit period, through its influence on demand, becomes a determinant of inventory decisions; therefore, inventory decisions should be determined jointly with credit decisions. Inflation and time value of money affects valuation of investments; hence their effect should not be disregarded in decision-making. Selling on credit exposes a firm to an additional dimension of default risk from customers as a result of inflation. Consequently, this article presents a mathematical model for the joint determination of optimal inventory and credit decisions for a day-terms credit-linked demand by incorporating the effects of inflation and the time value of money. It is assumed that an increase in the rate of inflation leads to an increase in bad-debts. The objective of the model is to maximize the present value of a firm's net profit per unit of time by jointly optimizing the day-terms credit period and order interval. A numerical example, sensitivity analysis, and observations are presented to illustrate the effectiveness of the proposed model.

The Time Value of Money Concept in Islamic Finance

2006 ◽  
Vol 23 (1) ◽  
pp. 66-89
Author(s):  
Abu Umar Faruq Ahmad ◽  
M. Kabir Hassan
Keyword(s):  
Basic Element ◽  
Islamic Finance ◽  
Purchasing Power ◽  
Conventional Theory ◽  
Modus Operandi ◽  
Time Value Of Money ◽  
Time Value ◽  
Value Of Money ◽  
Future Date ◽  
Rule Out

The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandi of time valuation according to the Shari`ah’s precepts vis-à-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.

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