Modelling cash flow and Investigate Bullwhip Effect on Cash Flow of the Firm on the Supply Chain

One of the fundamental problems of any firm in the supply chain is how to manage and control the flow of cash in the firm to improve the financial performance of the firm and hence the performance of the chain. In order to improve the financial performance of any firm in the supply chain, the flow of products in the whole supply chain and its effects on the cash flow should be examined. This paper first defines a mathematical model for the cash flow of a firm in the supply chain and then examines the effects of bullwhip caused by demand variations and delivery time on the cash flow. Demand variations and delivery time as result of product flow affect the cash flow of a firm by imposing additional costs such as storage costs and customer dissatisfaction costs while these effects are transmitted along the chain among other members. Since the optimal time and amount of each outgoing invoice depends on the amount of cash available in the firm over time, these bullwhip affect cash flow by changing the time and amount of payment, and these effects are enhanced moving through the chain.