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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Yuan Bian, David Lemoine, Thomas Yeung, Nathalie Bostel, Vincent Hovelaque, et al.. A dynamic lot-sizing-based profit maximization discounted cash flow model considering working capital requirement financing cost with infinite production capacity. International Journal of Production Economics, Elsevier, 2018, 196, pp.319-332. ⟨10.1016/j.ijpe.2017.12.002⟩. ⟨halshs-01683781⟩

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