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Modeling Liquidity and Survival: Inventory Speculation and Bankruptcy Risk
Authors: Tonghua Lin, Weiwei Chen, Xiaowei Xu
Status: Work in Progress
Inventory Management
Operations–Finance Interface
Stochastic Modeling
This project studies inventory decisions for financially constrained firms. Holding more inventory can generate profit, but it also ties up cash and raises the risk of bankruptcy. We model this trade-off and examine how a firm's ordering behavior should change with its financial position.