Abstract
The paper considers a problem of financial resource allocation in a higher education institution. The basic financial management instruments and the multi-stage cost minimization model created are described involving financial instruments to constraints. Both societal and institutional factors that determine the costs of educating students are examined and involved into the model, too. A financial flow planning model of an education institution (e.g., university) has been created, using two-stage or four-stage stochastic programming algorithms, with easily selected education institution's accounting data. The created model has been adapted to solve the two-stage and multi-stage financial flow optimization problem of the branch of university, and the obtained results of two-stage and multi-stage tasks have been compared. A mixed integer programming algorithm, realized in the model using CPLEX Studio 126 for optimization, can be flexibly adapted for practical needs of financial planning of education institutions.
Highlights
All education institutions face financial flow planning problems, when they need to decide how to use the available options for planning revenues and expenses of a certain period
This problem is of special interest in countries, where legal environment makes possible to use some financial instruments for rational financial resource allocation (Hills and Mahoney, 1978; CHEPS. (2010); Lepori B. et al, 2013; Raudla et al, 2015)
The universities have become public institutions, the financial management is a topical problem, since this topic has not been examined in the scientific literature
Summary
All education institutions face financial flow planning problems, when they need to decide how to use the available options for planning revenues and expenses of a certain period. According to the new Education and Studies Law (Lietuvos respublikos mokslo ir studijų įstatymas, 2009) Lithuanian universities became public institutions and they have more options in managing their finances, i.e. can plan their expenses by using various financial instruments. The Education and Studies Law, adopted in 2009, provided for changing the management of the higher public schools, i.e. adoption of new statutes, formation of councils and election of leaders It changed their legal status: budget universities and colleges became public institutions. The cash balance problem is to determine liquid asset allocation to cash and short-term investment portfolio, which corresponds to a permanent stochastic income, costs, and other financial commitments. A two-stage stochastic linear programming model with simple recourse for the short-term financial planning, described in (Hansotia, 2006; Thiele et al, 2010) is presented below
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