 The impact of cost structure on supply chain cash flow riskChih-Yang Tsai International Journal of Production Research, 2017, vol. 55, issue 22, 6624-6637 Abstract: Managing supply chain cash flow risk has become a crucial task for many cash-stressed businesses. Cash flows usually lag behind operating earnings and exhibit higher volatility than earnings, making them less predictable. Through the three components of the cash conversion cycle – days in inventory, receivables, and payables, this study investigates the impact of cost structure – cost ratios and cost compositions – on cash flow risk (standard deviation) and explains why and how management philosophies, such as Just-In-Time, and new production technologies, such as 3D printing, can lower cash flow risk by shortening days in inventory and shifting cost structure. An analytical model built on a simple demand process examines the basic relationship between cost structure and cash flow risk while a simulation approach studies the same relationship under a more general demand process with additional modelling considerations and a benchmark test. The simulation approach is applied on a publicly traded company’s financial data to demonstrate how supply chain process improvement can reduce the cash flow risk. Date: 2017 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:55:y:2017:i:22:p:6624-6637 Ordering information: This journal article can be ordered from DOI: 10.1080/00207543.2017.1330568 Access Statistics for this article International Journal of Production Research is currently edited by Professor A. Dolgui More articles in International Journal of Production Research from Taylor & Francis Journals |
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