Abstract
One of the main objectives of a firm is to add value to the firm and to earn more profit; therefore, the financial performance of a firm in a supply chain has to be managed and modelled properly. The aim of this thesis is to devise a payment strategy to improve the financial performance of a firm in a supply chain through evaluating the effects of the supply chain operation including demand variation, delivery time, customer satisfaction and horizontal and vertical integration on the financial performance of the firm. In fact, it aims to develop an optimisation mathematical model to maximise the aggregated cash flow of a firm within a time horizon through prioritising the cash outflow invoices and optimising the payment strategy parameters such as penalty rate and customer discount. To represent the cash flow of a firm as well as the movement of customers through the firm in different time periods, a cascade diagram is developed where the cash flow of a firm in each period is the summation of cash available from the previous period received from the satisfied customers plus the amount of cash received from the new customers minus the amount of cash which has to be paid to the upstream partners. Since the cash inflow of a firm in each time period is directly related to the number of satisfied customers in the previous period; therefore, the firm tries to ensure that the maximum number of satisfied customers are transferred to the next period in order to have the maximum amount of cash inflow in each period. In addition, the effects of demand variation and delivery time as a result of the supply chain operation, usually known as logistic bullwhip, on the financial performance of a firm in a supply chain are investigated in different time periods. In fact, the effects of the supply chain operation on the financial performance of a firm are formulated through introducing additional costs to the firm in each period. However, the cash outflow invoices in each period are scheduled and prioritised based on the available amount of cash in the firm and the penalty rate is applied to the customers who receive the invoices and suppose to pay the amount of invoices in each period on late payments, while the optimum penalty rate in each period is correlated to the amounts supposed to be received in the next periods and the penalty rate of the competitors. Additionally, the optimum customer discount can be applied to compensate the cost of customer dissatisfaction due to the late delivery of products to the customers. Also, horizontal and vertical integration between supply chain partners can improve the supply chain operation and, consequently the financial performance of a firm in a supply chain.