Inventory optimization under recession: Incentive-driven demand, advance payment strategies, and capital-efficient decision analysis

Economic recessions expose production inventory systems to financial shocks, unstable demand, and constrained liquidity, making resilient and capital-efficient decision-making essential. This study develops a recession-integrated production inventory model combining operational planning with incentive-based financial mechanisms, including advance payments, early-order discounts, and post-recession cashback offers. The framework interprets recession phases as forecast-assisted macroeconomic planning scenarios rather than assuming perfect recession foresight. A trapezoidal recession function captures the varying intensity of economic downturns and their influence on demand and production cost, while explicitly representing recession onset, plateau, and recovery phases in a computationally tractable form. Two cases are analyzed: a baseline recession-adjusted demand model and an incentive-responsive model integrating financial levers with production decisions. The nonlinear optimization problems are solved using Differential Evolution. Results show that incentive integration improves total profit by nearly 9.6% and secures approximately 80% of revenue in advance, thereby enhancing liquidity and reducing financial risk. Sensitivity analysis further demonstrates the importance of incentive calibration in maintaining profitability during recessionary conditions.