Firm’s Optimal Inventory Decision under Financial Constraints: A Multi-Period Model Based on Trade Credit

Abstract:

It is better for a firm to make his operational and financial decisions integrated than separately, especially when he faces financial constraints. This paper tries to find out how a firm makes his optimal inventory decision under trade credit, which bridges financial and operation decision as an integrated part of goods exchange, and is an important short-term finance. Following the method developed by Li et al. (2005) and Hu et al. (2010), this paper derives a myopic policy for a firm who orders from his same supplier repeated in an infinite setting. The optimal decision for each period is related to his demand’s density function, cumulative probability distribution function. And there are several directions for further study.

• Periodical: Advanced Materials Research (Volumes 482-484)
• Pages: 942-948
• DOI: https://doi.org/10.4028/www.scientific.net/AMR.482-484.942
• Online since: February 2012
• Authors: Zong Fang
• Keywords: Financial Constraints, Optimal Inventory Decision, Supply Chain, Trade Credit

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