Dynamics Study on the Financial Performance between Product Life Cycle and Inventory Policy: The case of a high-quality goods Retailing Industry in Kaohsiung
The Product Life Cycle (PLC) is based upon the biological life cycle. Through the period of development it is introduced or launched into the market, and the change of sales, the product will experience sprout, maturity, shrink and even die out. The classic product life cycle has four stages: Introduction; Growth; Maturity and Decline.
In the complex and rapid variation of business environment, PLC is even shorter than before; the well sell product today maybe is the unsalable stocks tomorrow. Demand volume of product is constantly changing in every PLC stages; what¡¦s the impact for financial performance in inventory cost under different inventory strategy and profit
variations, there are dynamic complexities inside with some special properties like non-linear, interconnected, time delay and counter-intuitive, etc.
Therefore, this research is using System Dynamics which has been normally used to resolve dynamic complexity problems as the study method to build up a model to simulate all of the inventory strategy in inventory theory that consider the trade off between all kinds of inventory cost to probe into the impact of financial performance
in different PLC stage for different product types to figure out the variation developments of all inventory costs. Some conclusions were generalized from the study as following:
1. This study builds up a developmental systemic model which is able to analysis the variation developments between inventory strategy and inventory cost for retail industry. The model includes all of inventory related molds like inventory,inventory strategy, all cost related to inventory, inventory performance measurement, etc.
2. The development systemic model is a very effective tool to support policymaker to measure inventory strategy and financial performance within a short time, to improve the management performance by using the best inventory strategy.
3. The development systemic model built up by this study can different products in different PLC stages and also considering their cost structure to analysis the impact between inventory strategy and inventory cost and variation developments of it.
Advisor:Chiang-Kuo Tu; Ming-rea Kao; Yi-min Tu; Pei-how Huang
School:National Sun Yat-Sen University
School Location:China - Taiwan
Source Type:Master's Thesis
Keywords:product life cycle system dynamics inventory policy cost
Date of Publication:07/23/2007