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Cash flow management network models with quantity discounting

Author

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  • Jorjani, S
  • Lamar, BW

Abstract

Cash flow management concerns the financial control and planning of a firm's net cash inflows and outflows. In this paper, we develop a network model to represent cash flow problems that involve a decrease in marginal costs (or an increase in marginal revenues) as the volume of cash increases. This type of problem, referred to as quantity-based discounting, is converted to a minimum concave cost network flow model. By making this conversion, we are able to solve efficiently the quantity-based discounting problem using established algorithms. A short-term money market investment problem is used to illustrate the mathematical models developed in this paper.

Suggested Citation

  • Jorjani, S & Lamar, BW, 1994. "Cash flow management network models with quantity discounting," Omega, Elsevier, vol. 22(2), pages 149-155, March.
  • Handle: RePEc:eee:jomega:v:22:y:1994:i:2:p:149-155
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    Cited by:

    1. Fontes, Dalila B.M.M. & Hadjiconstantinou, Eleni & Christofides, Nicos, 2006. "A dynamic programming approach for solving single-source uncapacitated concave minimum cost network flow problems," European Journal of Operational Research, Elsevier, vol. 174(2), pages 1205-1219, October.
    2. Juliana Nascimento & Warren Powell, 2010. "Dynamic Programming Models and Algorithms for the Mutual Fund Cash Balance Problem," Management Science, INFORMS, vol. 56(5), pages 801-815, May.
    3. Yenisey, Mehmet Mutlu, 2006. "A flow-network approach for equilibrium of material requirements planning," International Journal of Production Economics, Elsevier, vol. 102(2), pages 317-332, August.

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