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Competitive analysis of the online financial lease problem

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  • Dai, Wenqiang
  • Dong, Yucheng
  • Zhang, Xiaotian

Abstract

The financial lease is an important financing tool by which the lessee can acquire ownership of equipment upon the expiration of the lease after making a series of rent payments for the use of the equipment. In this paper, we consider an online version of this financial lease decision problem in which the decision maker (the lessee) does not know how long he/she will use the equipment. By assuming, the lessee can use the equipment through two options: financial lease or lease; we define and solve this online financial lease decision problem using the competitive analysis method. The optimal online strategies are discussed in each financial lease case with or without down payment. Finally, the optimal strategies are summarized as simple decision rules.

Suggested Citation

  • Dai, Wenqiang & Dong, Yucheng & Zhang, Xiaotian, 2016. "Competitive analysis of the online financial lease problem," European Journal of Operational Research, Elsevier, vol. 250(3), pages 865-873.
    • Handle: RePEc:eee:ejores:v:250:y:2016:i:3:p:865-873
    DOI: 10.1016/j.ejor.2015.10.020
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    References listed on IDEAS

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    1. Liu, Ming & Chu, Chengbin & Xu, Yinfeng & Zheng, Feifeng, 2010. "An optimal online algorithm for single machine scheduling with bounded delivery times," European Journal of Operational Research, Elsevier, vol. 201(3), pages 693-700, March.
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    3. Ran El-Yaniv & Richard M. Karp, 1997. "Nearly Optimal Competitive Online Replacement Policies," Mathematics of Operations Research, INFORMS, vol. 22(4), pages 814-839, November.
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    Cited by:

    1. Yong Zhang & Jiahao Li & Xingyu Yang & Xiaohui Wang, 2022. "Lease or financial lease? Deterministic strategies for on-line financial lease problem with the second-hand transaction," Journal of Combinatorial Optimization, Springer, vol. 44(2), pages 1248-1264, September.
    2. Jiamin Lu & Nishan Chen & Xin Feng, 2023. "Competitive Analysis of the Online Leasing Problem for Scarce Resources," IJERPH, MDPI, vol. 20(1), pages 1-11, January.
    3. Yinfeng Xu & Rongteng Zhi & Feifeng Zheng & Ming Liu, 2022. "Competitive algorithm for scheduling of sharing machines with rental discount," Journal of Combinatorial Optimization, Springer, vol. 44(1), pages 414-434, August.
    4. Schroeder, Pascal & Kacem, Imed, 2020. "Competitive difference analysis of the cash management problem with uncertain demands," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1183-1192.
    5. Xin Feng & Chengbin Chu, 2022. "Online leasing problem with price fluctuations and the second-hand transaction," Journal of Combinatorial Optimization, Springer, vol. 43(5), pages 1280-1297, July.
    6. Yong Zhang & Jingting Wu & Wenxiong Lin & Muyu Hou, 2022. "Competitive analysis for two-option online leasing problem under sharing economy," Journal of Combinatorial Optimization, Springer, vol. 44(1), pages 670-689, August.

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