A note on optimal inventory policies taking account of time value

In this paper, the authors propose the optimal inventory policies taking account of time value by applying the concept of the present value method. In particular, some well-known continuous and deterministic models are analytically and/or numerically discussed taking account of time value. They discuss the inventory systems without and with backlogging allowed. The authors examine the asymptotic characteristics of the total cost by perturbation of the instananeous interest rate. They further show numerical examples and describe how to determine the optimal inventory policies. The authors will affirm that the concept of time value introduced here is useful to accurately evaluate the inventory management policies.