Integrating Budgeting Models into Scheduling and Planning Models for the Chemical Batch Industry

Abstract

This paper addresses scheduling and planning with financial management in the batch chemical process industries. A cash flow and budgeting model is coupled with an advanced scheduling and planning procedure for a specific multipurpose batch specialty chemical plant. To motivate the use of an integrated model, a sequential scheme is first solved. Hence, the scheduling and planning problem of the batch specialty chemical plant is optimized in order to fulfill the due date policy. Then, a deterministic cash management model is optimized to maximize the enterprise earnings, using the cash flows of the scheduling-planning model as parameters. As a result, owing to the fulfillment of customer requirements, the solvency of the firm changes, and hence, the funding policy is affected. The results of the sequential approach are then compared with the integrated model highlighting the advantage of the latter option. Here, production scheduling-planning and cash management are optimized in unison with a common objective of maximizing earnings. The model development made in this paper and the results suggest that a new conceptual approach in enterprise management systems consisting of the integration of the enterprise finance models with the company operations models is a must to improve the firm's reliability and its overall earnings.

Advances in Integrated and Sustainable Supply Chain Planning

“…Thus, the models supporting the decision-making operate in an isolated way. They optimize partial sets of decision variables, but they do not lead to actual integration of relationships despite promoting the sharing of information between different business entities Romero et al (2003). This partitioning of decision-making in companies has been reflected in the goals of the studies and the optimization models developed to support them.…”

Metaheuristic multiobjective optimisation approach for the scheduling of multiproduct batch chemical plants

“…However, very limited number of works was reported on the joint financial and operative modelling. The work of Badell et al [16] addresses the implementation of financial cross-functional links with scheduling, planning and budgeting in short term planning, while Romero et al [17] address scheduling and planning with financial management in the batch chemical process. Yi and Reklaitis [18] presented an integrated analysis of production and financing decisions regarding the optimal design of batch-storage networks.…”

On the role of microeconomics, planning, and finances in product design

“…Even textbooks of recent update, like Peters et al64 continue to use this type of assumptions. Recently some work has started to depart from this formulation, proposing to follow the cash flow throughout time in more detail 32, 62, 65–67. Adding cash flow balance constraints allow to determine when and what portion of proceeds is returned as pure profit to the investors or to the company's general account, what portion is used to finance expansions (if an when this is more advantageous than fresh capital investment).…”