A concept of an integrative working capital management in line with wealth maximization criterion
A concept of an integrative working capital management in line with wealth maximization criterion

Summary/Abstract: Typical financial models applied in the field of integrative Operating Working Capital (OWC) management assume continuous and proportionally changing to sales cash flows. This assumption is stated in order to get an elegant analytical solution to optimization problems. In real business situations, however, these flows are not continuous as the timing and magnitude of them result from batches of materials deliveries and sales. This paper improves the typical financial model as it allows for a discretionary cash flows pattern and incorporates batches of materials deliveries and sales together with delivery/ordering cycles into a wide range of decision variables available for integrated OWC management. Deterministic simulations on the financial model and application of the concurrent decision model to OWC management enable the finding of an optimal decision consistent with wealth maximization criterion.

• Details
• Contents