A holistic framework for short-term supply chain management integrating production and corporate financial planning

Traditional approaches for SCM usually focus on process operations and neglect the financial side of the problem. In this work we present a novel approach for holistically optimizing the combined effects of operations and finances in SCM. To achieve such integration between different business areas, it is derived an integrated model for SCM, which incorporates process operations as well as budgetary constraints. The novelty of this formulation lies not only in the insertion of financial aspects within a SC planning formulation, but also in the choice of a financial performance indicator, i.e. the change in equity, as the objective to be optimized in the integrated model. The main advantages of this mathematical formulation are highlighted through a case study, in which the results obtained by the integrated model are compared with those computed by the traditional sequential strategy, in which the operations are firstly computed and the finances are fitted afterwards. The obtained results show the importance of devising broader modeling systems for SCM leading to increased overall earnings and providing further insights on the interactions between operations and finances. r 2006 Elsevier B.V. All rights reserved.