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Bounds for the solution to the single-period inventory model with compound renewal process input: An application to setting credit card limits

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  • Budd, J.K.
  • Taylor, P.G.

Abstract

Motivated by a desire to calculate the optimal credit limit for a credit card account in terms of the card-holder’s purchasing behaviour, we consider a single-period inventory model in which the total value of all attempted purchases increases in jumps throughout the period. If a purchase does not cause the limit to be exceeded, then that purchase is approved and the total value of approved purchases is increased by its value. On the other hand, if the limit is exceeded, then the purchase is rejected and the total value of approved purchases remains at its previous level.

Suggested Citation

  • Budd, J.K. & Taylor, P.G., 2019. "Bounds for the solution to the single-period inventory model with compound renewal process input: An application to setting credit card limits," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1012-1018.
    • Handle: RePEc:eee:ejores:v:274:y:2019:i:3:p:1012-1018
    DOI: 10.1016/j.ejor.2018.11.022
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    References listed on IDEAS

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    1. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. Joseph Abate & Ward Whitt, 1995. "Numerical Inversion of Laplace Transforms of Probability Distributions," INFORMS Journal on Computing, INFORMS, vol. 7(1), pages 36-43, February.
    3. Bertoin, J. & van Harn, K. & Steutel, F. W., 1999. "Renewal theory and level passage by subordinators," Statistics & Probability Letters, Elsevier, vol. 45(1), pages 65-69, October.
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    Cited by:

    1. Babai, M. Zied & Ivanov, Dmitry & Kwon, Oh Kang, 2023. "Optimal ordering quantity under stochastic time-dependent price and demand with a supply disruption: A solution based on the change of measure technique," Omega, Elsevier, vol. 116(C).

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