Optimal Working Capital, Inventory Control, and short-term financing decisions under cash-flow constraints

This study develops a multi-period optimization model that integrates working-capital management, inventory control, and short-term financing decision under cash flow constraints. The model determines purchasing, sales, inventory, shortages, borrowing, and repayment decisions while accounting for revenue purchasing and holding cost, minimum cash requirements and borrowing capacity. A numerical analysis and sensitivity analysis examine how changes in financing rates, liquidity reuqirements, borrowing limits, and demand affect profitability and operational decisions.