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On granting credit in a random environment

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  • Karl Waldmann

Abstract

The paper extends the Bierman-Hausman credit granting model by incorporating economic factors, which may vary randomly over time. Sufficient conditions are found for the optimality of simple credit policies. The monotonicity results are based on nonstandard orderings induced by the probability of collection. Moreover, monotonicity of the credit policy with respect to the prior information is studied. Copyright Physica-Verlag 1998

Suggested Citation

  • Karl Waldmann, 1998. "On granting credit in a random environment," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 47(1), pages 99-115, February.
    • Handle: RePEc:spr:mathme:v:47:y:1998:i:1:p:99-115
    DOI: 10.1007/BF01193839
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    References listed on IDEAS

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    1. Eric Rosenberg & Alan Gleit, 1994. "Quantitative Methods in Credit Management: A Survey," Operations Research, INFORMS, vol. 42(4), pages 589-613, August.
    2. Venkat Srinivasan & Yong H. Kim, 1987. "Note---The Bierman-Hausman Credit Granting Model: A Note," Management Science, INFORMS, vol. 33(10), pages 1361-1362, October.
    3. Yvo M. I. Dirickx & Lee Wakeman, 1976. "An Extension of the Bierman-Hausman Model for Credit Granting," Management Science, INFORMS, vol. 22(11), pages 1229-1237, July.
    4. Harold Bierman, Jr. & Warren H. Hausman, 1970. "The Credit Granting Decision," Management Science, INFORMS, vol. 16(8), pages 519-532, April.
    5. Gordon Pye, 1966. "A Markov Model of the Term Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(1), pages 60-72.
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