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Optimal repayment policies for multiple loans

Author

Listed:
  • Gupta, Sushil K
  • Kunnathur, Anand S
  • Dandapani, Krishnan

Abstract

This paper extends the applications of scheduling theory to certain problems in the area of finance. Specifically, a branch and bound algorithm to identify optimal repayment policies for multiple loans (credit purchases) has been developed. Each loan qualifies for a discount if it is paid on or before a certain date and a penalty is imposed if it is paid after its due date. These two dates are different in general. It is assumed that the cash for repayment is generated at a constant rate per day and it can be invested so that it continues to earn money until used for repayment. The objective is to minimize the present value of all future cash outflows.

Suggested Citation

  • Gupta, Sushil K & Kunnathur, Anand S & Dandapani, Krishnan, 1987. "Optimal repayment policies for multiple loans," Omega, Elsevier, vol. 15(4), pages 323-330.
  • Handle: RePEc:eee:jomega:v:15:y:1987:i:4:p:323-330
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    References listed on IDEAS

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    1. Richard Ehrhardt, 1979. "The Power Approximation for Computing (s, S) Inventory Policies," Management Science, INFORMS, pages 777-786.
    2. Richard Ehrhardt & Charles Mosier, 1984. "A Revision of the Power Approximation for Computing (s, S) Policies," Management Science, INFORMS, pages 618-622.
    3. Arthur F. Veinott, Jr. & Harvey M. Wagner, 1965. "Computing Optimal (s, S) Inventory Policies," Management Science, INFORMS, pages 525-552.
    4. Eliezer Naddor, 1975. "Optimal and Heuristic Decisions in Single-and Multi-Item Inventory Systems," Management Science, INFORMS, pages 1234-1249.
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    Cited by:

    1. Cheng, T. C. E. & Ding, Q. & Lin, B. M. T., 2004. "A concise survey of scheduling with time-dependent processing times," European Journal of Operational Research, Elsevier, vol. 152(1), pages 1-13, January.
    2. repec:pal:jorsoc:v:60:y:2009:i:12:d:10.1057_jors.2008.123 is not listed on IDEAS
    3. Kang, Liying & Ng, C.T., 2007. "A note on a fully polynomial-time approximation scheme for parallel-machine scheduling with deteriorating jobs," International Journal of Production Economics, Elsevier, pages 180-184.
    4. Gupta, Sushil & Dutta, Kaushik, 2011. "Modeling of financial supply chain," European Journal of Operational Research, Elsevier, vol. 211(1), pages 47-56, May.
    5. Voutsinas, Theodore G. & Pappis, Costas P., 2002. "Scheduling jobs with values exponentially deteriorating over time," International Journal of Production Economics, Elsevier, pages 163-169.
    6. Qian, Jianbo & Steiner, George, 2013. "Fast algorithms for scheduling with learning effects and time-dependent processing times on a single machine," European Journal of Operational Research, Elsevier, vol. 225(3), pages 547-551.
    7. repec:pal:jorsoc:v:55:y:2004:i:3:d:10.1057_palgrave.jors.2601693 is not listed on IDEAS

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