Once the transfer schedule has been determined, the problem of deposit and concentration banks becomes one of location assignment.
Sartoris and Spriull's (S&S paper shows that goal programming (GP) can be used in working capital decisions to achieve the two essentially conflicting goals of profitability and liquidity. In the GP model, the objective function is formulated in terms of the absolute deviation fro a number of stated goals; thus the GP model allows for more than one objective function (vs. the linear programming technique). The model developed by S&S incorporates as one of its goals the more standard maximization of NPV subject to purely technological contraints (absent any working capital goals). This is done by solving a linear programming problem to obtain a level of profits, and deviations from this level become one of the goals in a more general CP problem incorporating certain working capital constraints (i.e., specific quick ratio, current ratio, cash balance, etc.). The GP model is developed through a numerical illustration of its application. The sensitivity of its results to priority parameters can be investigated. In addition, the priority of goals can be changed to obtain alternative solutions.
Quarterly accounting data becomes more important in working capital management. Gentry and Lee use an X-ll time-series decomposition model to analyze quarterly income statement data. They find that there are time, firm, and ledger effects in quarterly accounting data. These results shed some light on the possible applications of both short-term and long-term financial planning models in financial management.
In their paper, Stone and Hill discuss the problems associated with the timing and amount of cash transfers, concentrating on cash transfer scheduling for cash concentration. The authors' starting points are the current available methods for cash transfer and contemporary practice. The necessity to minimize cost (usually tied to the frequency of transactions) while also minimizing the interest lost on standing balances and maximizing the benefit of dual balances (the availability of the same funds to the company at two different banks due to lags in balance clearing) leads to a formulation of the cash transfer problem as a programming problem. The constraints relate to the