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

J.K. Budd and P.G. Taylor

European Journal of Operational Research, 2019, vol. 274, issue 3, 1012-1018

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.

Keywords: Applied probability; Compound renewal process; Newsvendor model; Credit card limits (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:274:y:2019:i:3:p:1012-1018

DOI: 10.1016/j.ejor.2018.11.022

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