Integrating Process Operations and Finances

Lainez-Aguirre and L. Puigjaner, Advances in Integrated and Sustainable 

Importantly, a key component in financial modeling is the effective control of cash. Its steady and healthy circulation throughout the entire business operation has repeatedly been shown to be the basis of business solvency (Howard and Upton 1953). Indeed, the availability of cash governs the production decisions taken in a company. For this reason, models of operations of the supply chain should not consider cash as an infinite resource. A production plan cannot be implemented if it violates the minimum cash flow imposed by the firm (i.e., if the amount of raw materials and/or utilities required cannot be purchased due to a temporary lack of cash). 

Fact-based strategic planning is increasingly desired and pursued by firms, but many issues remain about how to do it (Shapiro 2004). Optimization models seem to offer an appealing framework for supporting corporate financial decisions, as well as for integrating them with process operation decisions (Shapiro 2006). Currently, with the recent advances in optimization theory and software applications there is no apparent reason why models for SCM that merge concepts from diverse areas of the firm cannot be constructed. 

This chapter proposes a general framework for the design of SCs based on the development of holistic models, which cover two areas of the company, the process 

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