IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v269y2024ics0925527324000148.html
   My bibliography  Save this article

Optimal pricing and financing strategies for leased equipment considering maintenance and lessees’ options

Author

Listed:
  • Liu, Yanping
  • Liu, Biyu
  • Yang, Haidong

Abstract

Periodic payment for leased equipment may lead to capital constraint for lessors. In view of preventive maintenance (PM) strategy and lessees' options, the impact of different financing modes on lessor's pricing decision-making for leased equipment is studied. By considering the impact of age and usage on PM strategy and lessees' revenue, and lessees-different options to return, renew or purchase leased equipment after the lease expires, a game-theoretic model with respect to advance payment, bank loan and mixed financing modes is presented. The lessor's optimal pricing and financing strategies, as well as lessees' options are obtained by using non-cooperative game, cooperative game and transfer-payment contract. The results show: (1) with the increase of bargaining level, the periodic rental price decreases; Under non-cooperative game, lessees renew the equipment first and then purchase it, while under cooperative game lessees always renew the lease. The lessor can motivate lessees to participate in cooperation through appropriate transfer-payment contract; (2) as the advance payment discount increases, the lessor shifts from advance payment to bank loan financing mode under non-cooperative game, while always adopts a financing mode including advance payment under cooperative game. Both leasing parties accept the advance payment financing mode only when the advance payment discount is within a certain range; (3) the increased usage of leased equipment brings larger PM and corrective maintenance (CM) burden to the lessor, which affects lessees' options and both leasing parties' profits. The lessor shall measure the PM and CM costs of leased equipment to maximize the profit.

Suggested Citation

  • Liu, Yanping & Liu, Biyu & Yang, Haidong, 2024. "Optimal pricing and financing strategies for leased equipment considering maintenance and lessees’ options," International Journal of Production Economics, Elsevier, vol. 269(C).
  • Handle: RePEc:eee:proeco:v:269:y:2024:i:c:s0925527324000148
    DOI: 10.1016/j.ijpe.2024.109157
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527324000148
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ijpe.2024.109157?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lazhar Tlili & Anis Chelbi & Rim Gharyani & Wajdi Trabelsi, 2024. "Optimal Preventive Maintenance Policy for Equipment Rented under Free Leasing as a Contributor to Sustainable Development," Sustainability, MDPI, vol. 16(9), pages 1-24, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:269:y:2024:i:c:s0925527324000148. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.