A dynamic lot-sizing-based profit maximization discounted cash flow model considering working capital requirement financing cost with infinite production capacity

Yuan Bian; David Lemoine; Thomas Yeung; Nathalie Bostel; Vincent Hovelaque; Jean-Laurent Viviani; Fabrice Gayraud

A dynamic lot-sizing-based profit maximization discounted cash flow model considering working capital requirement financing cost with infinite production capacity

Yuan Bian ^{1, 2} David Lemoine ^{1, 2} Thomas Yeung ^{1, 2} Nathalie Bostel ² Vincent Hovelaque ³ Jean-Laurent Viviani ³ Fabrice Gayraud ^{1, 2}

1 IMT Atlantique - DAPI - Département Automatique, Productique et Informatique

2 SLP - Systèmes Logistiques et de Production

LS2N - Laboratoire des Sciences du Numérique de Nantes

3 CREM - Centre de recherche en économie et management

Abstract : In times of crisis, companies need free cash flow to efficiently react against all uncertainty to ensure solvency. However, classical dynamic lot-sizing models only consider the physical flow of goods. In this paper, we introduce a first link between dynamic lot-sizing and the financial aspects of working capital requirements (WCR). We propose a new generic WCR model which allows us to evaluate the company's financial situation throughout the planning horizon. Moreover, a dynamic lot-sizing-based, discounted cash flow model is established for single-site, single-level, single-product and infinite capacity cases. It is shown that the zero-inventory ordering property holds for this case and thus a polynomial-time algorithm may be utilized. Numerical tests are presented in order to show the relevance of our approach compared with the traditional dynamic lot-sizing model.

Keywords : dynamic lot-sizing working capital requirement discounted cash flow delays in payment profit maximization

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Journal articles

Domain :

Humanities and Social Sciences / Business administration

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A dynamic lot-sizing-based profit maximization discounted cash flow model considering working capital requirement financing cost with infinite production capacity

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