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The Impact Analysis of the Variation in the Price of Oil and the Exchange Rate on the Optimal Quantity of Orders in the Zinc Importing Companies in Colombia

Author

Listed:
  • Juan Manuel Candelo Viafara

    (PhD in Management, Universidad del Valle, Cali, Colombia,)

  • Mar a del Pilar Rivera Diaz

    (Master in Occupational Risk Prevention, Universidad del Valle, University of M laga, M laga, Spain)

  • Jairo Andres Torres Daravina

    (Industrial Engineering Student, University of Valle, Buga Campus, Colombia.)

Abstract

This paper analyses the impact of oil price and exchange rate variations on the economic order quantity (EOQ) of the zinc importing industry in Colombia. As a methodology, a vector autoregressive model (VAR) is applied, which allows quantifying how the variation of one variable impacts another in a dynamic system of equations. The results show a negative impact on EOQ by exchange rate revaluation due to increased import costs. On the other hand, oil price increments generate growth in the EOQ because the peso appreciates, purchasing imported raw materials inexpensive.

Suggested Citation

  • Juan Manuel Candelo Viafara & Mar a del Pilar Rivera Diaz & Jairo Andres Torres Daravina, 2022. "The Impact Analysis of the Variation in the Price of Oil and the Exchange Rate on the Optimal Quantity of Orders in the Zinc Importing Companies in Colombia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 194-201, November.
    • Handle: RePEc:eco:journ2:2022-06-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic order quantity; EOQ; oil; inventory policy; exchange rate; VAR;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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