Collaborative Research: Managing Material Flow and Cash Flow in the Supply Chain

Northwestern University, Evanston IL

Investigators

Abstract

The purpose of this collaborative research project is to develop new models that can help firms make their production and financial decisions simultaneously. Production decisions (e.g., when to produce and how much to produce, when to order and how much to order) and financial decisions (e.g., short term borrowing, issuing of dividends) are interrelated in a firm. This project will integrate recent results in production and inventory control with those in finance, as well as new methodologies in stochastic programming, to develop models that can help firms make their production and financial decisions simultaneously in the presence of demand uncertainty and financial constraints. In this research, models will be developed for making production and financial decisions simultaneously and study the effect of financial constraints on production decisions. This is motivated by experience working with industry. The research tasks offer the potential to integrate the state of the art in traditional production and inventory control modeling with finance. If successful, the research will provide structural results for the problems and meaningful insights for managers; and, useful tools for improvement in production and inventory planning. The decision tools will integrate material flows and financial flows and help firms make production and financial decisions simultaneously in the presence of uncertainty. The models will be demonstrated through actual use by industrial partners.