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Safety stock optimization under lead time ambiguity
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| Published in: | Global business and finance review volume:27; month:10; year:2022; number:5; 27(2022), 5 vom: Okt., Seite 55-64; pages:55-64 |
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| Authors and Corporations: | , , |
| Other Authors: | Kim, Pan Soo [Author] • Kwon, Joon Yeop [Author] |
| Type of Resource: | E-Book Component Part |
| Language: | English |
| published: |
2022
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| Series: |
Global business and finance review, 27(2022), 5 vom: Okt., Seite 55-64
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| Subjects: | |
| Source: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
| ISSN: | 2384-1648 |
| License: |
| Summary: | Purpose: The purpose of this study is to investigate how ambiguity faced by the risk-neutral manager affects the firm’s optimal level of safety stock. Design/methodology/approach: This study adopts the traditional model of Arrow et al. (1951) and employ a manager who has multiple prior beliefs about the probability distribution of the lead time. Findings: This study finds that facing lead time ambiguity, the manager becomes more conservative when choosing the optimal stock level to hold and the amount of safety stock. Research limitations/implications: The future research would consider a risk-averse manager who could be compensated or punished as a result of stock management. Then the future research would examine the interactive effects of the manager’s risk aversion and lead time ambiguity on the optimal safety stock level. Originality/value: This would be the first study that investigates the effects of ambiguity on the level of safety stock. |
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| ISSN: | 2384-1648 |
| DOI: | 10.17549/gbfr.2022.27.5.55 |
| Access: | Open Access |