CASH FLOW MANAGEMENT NETWORK MODELS WITH QUANTITY DISCOUNTING

Cash flow management concerns the financial control and planning of a firm's net cash inflows and outflows. In this paper, we develop a netw ork model to represent cash flow problems that involve a decrease in m arginal costs (or an increase in marginal revenues) as the volume of c ash increases. This type of problem, referred to as quantity-based dis counting, is converted to a minimum concave cost network flow model. B y making this conversion, we are able to solve efficiently the quantit y-based discounting problem using established algorithms. A short-term money market investment problem is used to illustrate the mathematica l models developed in this paper.