Inventory Cost Optimization Strategy

Due to the advanced technology, high tech industries must invest in new product development to sustain market demand and development. Cost management and control have always been important issues for enterprise especially in controlling inventory holding, shipment and warranty costs. This study develops an inventory cost model and explores the effect of three variables on the cost of high tech products. The three variable costs are (1) inventory holding cost, (2) shipment cost, and (3) warranty cost. Ability to measure accurately the cost incurred will allow the right value for the product to be set. The estimation of value from the customer's point of view is central to the determination of market offerings. Inventory models with deterioration, season pattern demand, and expiration date have received very little attention from researchers. Decreasing selling price for a market has received little attention in the past years. This study deals with the above problems and considers supplier involvement in high tech product development. This study also proposes the concept of Economic shipment cost and product warranty to the shipment and marketing strategy.