The Optimal Strategy of the Demand Following Firm

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F16%3A86098068" target="_blank" >RIV/61989100:27510/16:86098068 - isvavai.cz</a>
Result on the web
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DOI - Digital Object Identifier
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Result language
angličtina
Original language name
The Optimal Strategy of the Demand Following Firm
Original language description
The optimal strategy of a firm in a competitive environment is generally derived from the price of produced good and its market demand. However, the firm usually has to make a decision about its future production and hence its supply at the moment when neither the price nor the market demand is known yet. In this case, firms are often recommended to keep inventory as a "buffer stock" to cover the fluctuations in future market demand. Keeping high inventory as well as providing insufficient supply is penalized by the increased costs which decrease the competitiveness of the firm on the market. The main goal of this paper is to derive the optimal production strategy of the demand following firm. The optimal production strategy should lead to a firm supply, which could satisfy the demand and will be not connected with keeping too much inventory. The dynamic optimization problem of the firm is solved. As there are different expectations about the growth of the aggregate demand during the phases of expansions and contractions in the economy, the optimal production strategy of the firm varies with the cyclic movement of the demand. The proposed strategy is tested on the aggregate data of the Czech economy.
Czech name
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Czech description
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Project
<a href="/en/project/EE2.3.20.0296" target="_blank" >EE2.3.20.0296: Research team for modelling of economic and financial processes at VSB-TU Ostrava</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)<br>S - Specificky vyzkum na vysokych skolach

Publication year
2016
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Proceedings of 14th International Scientific Conference Economic Policy in the European Union Member Countries: September 14-16, 2016, Petrovice u Karviné, Czech Republic. Part 1
ISBN
978-80-7510-210-2
ISSN
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e-ISSN
neuvedeno
Number of pages
10
Pages from-to
832-841
Publisher name
Slezská univerzita v Opavě, Obchodně podnikatelská fakulta v Karviné
Place of publication
Opava
Event location
Petrovice u Karviné
Event date
Sep 14, 2016
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
000403638200088

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