search query: @author Ostaszewski, A. J. / total: 2
reference: 1 / 2
« previous | next »
| Author: | Gietzmann, M. B. Ostaszewski, A. J. |
| Title: | Hedging the purchase of direct inputs in an inflationary environment |
| Journal: | Management Accounting Research
1999 : MAR, VOL. 10:1, p. 61-84 |
| Index terms: | Accounting Theories Inventory control Methodology Pricing Contracts Management accounting |
| Language: | eng |
| Abstract: | An important category of costs that management need to plan for and control are the costs associated with the purchase of direct inputs. Traditional operations management methodologies model this problem as requiring management to direct attention to the trade-off btw. inventory holding costs vs. stock-out and back-ordering costs. However, when advance purchase agreements on inventory can be made management can purchase claims which to do not give rise to holding costs and hence the traditional analysis of the problem requires augmentation. Working under the assumption of non-resellability of inventory, it is shown how advance purchase agreements can be cast within an options framework. This allows the problem to be reinterpreted as determining the optimal hedge for accounting profit and hence provides constructive guidelines for financial managers concerned about the effects of input price volatility on accounting profit. |
« previous | next »
SCIMA