Berling, Peter; Rosling, Kaj - In: Management Science 51 (2005) 12, pp. 1804-1815
The effect of financial risks on (R, Q) inventory policies is analyzed in a real options framework. Simple adjustments of the usual formulas for R and Q are suggested and tested. Stochastic demand and purchase costs are considered, both with known systematic (business-cycle-related) risk. The...