A Simultaneous Decision Model for Production, Marketing and Finance

William W. Damon and Richard Schramm
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William W. Damon: Duke University
Richard Schramm: Cornell University

Management Science, 1972, vol. 19, issue 2, 161-172

Abstract: The Holt, Modigliani, Muth, and Simon production scheduling model is extended to incorporate variables reflecting marketing and working capital management in a cash flow formulation. A constrained nonlinear program is dervied for which a local optimal solution is discovered employing the SUMT program. Reasonable values are are assigned to the parameters and the relative profitability of such a simultaneous formulation, compared to a sequential model, is tested. Initial results demonstrate an improvement of 25% by solving for the optimal values of the functional decision variables simultaneously.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:19:y:1972:i:2:p:161-172

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