OPTIMISATION OF RECEIVABLES MANAGEMENT IN A MINE, USING LINEAR PROGRAMMING

The paper presents an example of a theoretical linear programming model in the management of mine receivables. To this end, an economic production model of linear programming was applied to optimising the revenue of the mine. The amount of product sold by the mine to individual customers was assumed as the decisive variable, and the product price was the parameter of the objective function. As for boundaries, upper receivable limits were assumed for each of the adopted receivable collection cycles. The sequence of collection cycles, and the receivable values assigned to them, were adopted according to the growing probability of overdue and uncollectible receivables. Two receivables-management optimisation cases were analysed, in which the objective function was to maximise the sales value (revenue) of the Mine. The first case studied in the model involves application of a discount to reduce the product price, in a mine whose production output is not being used to capacity. To improve cash flow, the mine offers its customers a reduced price and increased purchasing up to the mine's capacity in exchange for shortened receivable collection times. Fixed and variable-cost accounting is applied to determine the relevant price reduction. In the other case analysed, the mine sells as much as its current output allows, but despite that is still forced to reduce the price of its products. Application of a discount in this case (reducing the product price) inevitably involves shortened receivable collection times and reduced costs of financing trade credit.