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Integrated supply chain network planning and financial planning respecting the imperfection of the capital market

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  • Martin Steinrücke

    (University of Greifswald)

  • Wolfgang Albrecht

    (University of Greifswald)

Abstract

Within supply chain networks, the integration of decisions regarding configuration, operations and financing is important to balance overall liquidity and to prevent insolvency. This applies in particular in case of a business take-over by an institutional investor, as the latter may formulate return expectations that require complete restructuring of processes. Motivated by the real-life case of a sanitary company in Germany that had to deal with the aforementioned situation, we develop a mixed-integer linear programming model that is able to coordinate planning during the investor’s engagement (limited to a specific number of years) with payouts that are structured according to his/her consumption preferences. As the investor’s scope of action is characterized by alternatives that additionally include financial investments and financings with different transaction-specific interest rates, it stands to base modeling on the premises of imperfect capital markets. The underlying coherent theory is applied to the integrated supply chain network planning and financial planning after a business take-over for the first time. Besides the exemplary analysis of a four-stage supply chain with three suppliers, plants, warehouses and markets, a numerical analysis with other randomly generated network structures is used for the validation of the model formulation. As a result, all considered instances could be solved to optimality in acceptable computation times using high-performance hardware and software.

Suggested Citation

  • Martin Steinrücke & Wolfgang Albrecht, 2018. "Integrated supply chain network planning and financial planning respecting the imperfection of the capital market," Journal of Business Economics, Springer, vol. 88(6), pages 799-825, August.
    • Handle: RePEc:spr:jbecon:v:88:y:2018:i:6:d:10.1007_s11573-017-0883-3
    DOI: 10.1007/s11573-017-0883-3
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    References listed on IDEAS

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    4. Martin Steinrücke & Wolfgang Albrecht, 2016. "A flow-to-equity approach to coordinate supply chain network planning and financial planning with annual cash outflows to an institutional investor," Business Research, Springer;German Academic Association for Business Research, vol. 9(2), pages 297-333, August.
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    Cited by:

    1. Beatrice Marchi & Lucio Enrico Zavanella & Simone Zanoni, 2020. "Joint economic lot size models with warehouse financing and financial contracts for hedging stocks under different coordination policies," Journal of Business Economics, Springer, vol. 90(8), pages 1147-1169, September.
    2. Wolfgang Albrecht & Martin Steinrücke, 2020. "Continuous-time scheduling of production, distribution and sales in photovoltaic supply chains with declining prices," Flexible Services and Manufacturing Journal, Springer, vol. 32(3), pages 629-667, September.

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