Delayed Cash Payment, Receivable and Inventory Management

Current research efforts on inventory management mainly focus on operational decisions and inventory control. In this research, a framework is proposed for incorporating financial considerations including delayed cash payment, receivable into multi-period inventory models. Specifically, we characterize dynamic financial constraint that is updated periodically according to production activities. The optimal operational policy and its dependence on the financial state are studied. The paper also demonstrates the importance of firms considering delayed cash payment.