A NOTE ON EVALUATING INVESTMENTS IN INVENTORY SYSTEMS: A NET PRESENT VALUE FRAMEWORK

Recently, Roumi and Schnabel wrote an addendum to attempt to fill gaps found in the article by Kim, Philippatos and Chung. They claimed that the objective functions developed by Kim, Philippatos and Chung are concave. However, we present a counter example which disproves their claim. In addition, we give clarifying explanations that the unique inflection point is a global maximum even though the objective functions are not concave. Consequently, we justify the optimally of solutions derived from the first order conditions in Kim, Phillippatos and Chung.