Application of network flow models for the cash management of an agribusiness company

In this study, we apply network flow models with gains and losses to deal with the cash flow management problem of a typical Brazilian company which produces frozen concentrated orange juice. The aim is to maximize the cash return of the financial resources at the end of a multi-period and finite planning horizon. Two real-life situations are analyzed: in the first, the network flow model in Golden, Liberatore, and Lieberman (1979) is used to support operational cash flow decisions and in the second, the model is extended to cope with tactical planning of loan payments. The corresponding linear programming models representing these situations were solved using a solver tool available in well-known spreadsheet software, which is of wide applicability for analytical work in business. The numerical results obtained show that the models are flexible and effective to support the decisions involved, being able to generate solutions as good as or better than the ones of the treasury of the citrus company.

► This work applies network flow models to deal with the cash flow management problem.
► The aim is to maximize the cash return at the end of a multi-period planning horizon.
► Two real-life situations are analyzed in a frozen concentrated orange juice company.
► The results show that the models are flexible and effective to support the decisions.