Online leasing problem with price fluctuations and the second-hand transaction
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Online leasing problem with price fluctuations and the second-hand transaction Xin Feng1
· Chengbin Chu2
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This paper proposes an online leasing problem considering both price fluctuations and the second-hand transaction. In the studied problem, the price of the required equipment is assumed to fluctuate over time and lie in a predetermined range [1, M]. Moreover, the price between two adjacent times is controlled within an acceptable range [1/α, α]. The equipment can be sold through second-hand transaction after its end of use. The selling price in the second-hand transaction is assumed to vary along with the price fluctuations. The aim of this paper is to find the best possible online leasing strategy which generates a minimal cost for using the equipment. We present an online leasing algorithm for solving this problem and prove it to be the optimal online algorithm. Computational experiments are conducted to evaluate the characteristics of the problem and the performance of the proposed online leasing algorithm. Keywords Online leasing · Competitive analysis · Price fluctuations · Second-hand transaction
1 Introduction The leasing industry offers popular financing alternatives in both developed and developing economies and plays an important role in capital formation (Peck 2014; Shi and Xu 2015). Considering the strong uncertainties in the financial market, the online version of leasing problem (a.k.a. the ski-rental problem) has become one of the most fundamental and studied on-line decision problems in economics and computer science. In the online leasing problem, a company wishes to acquire particular equipment
B
Chengbin Chu [email protected] Xin Feng [email protected]
1
School of Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
2
ESIEE Paris, Universite Paris-Est, 2 Boulevard Blaise Pascal, 93162 Noisy-le-Grand Cedex, France
123
Journal of Combinatorial Optimization
for operational use at the lowest cost. However, it is hard to make the optimal leasing strategy since the company does not know the exact usage time of the equipment. Thus, a well-established technique, i.e., competitive analysis, is adopted to evaluate the online leasing strategies by competitive ratio. The classical online leasing problem assumes that the price of the equipment remains unchanged. In practice, however, the price of the equipment often varies with time, and the price fluctuations cannot be learned in advance. Such an uncertainty in the price increases the difficulty of the online leasing problem. Besides, in the context of global advocacy for sustainable development, how to reduce the consumption of resources through sustainable use of goods is an important issue (Chang et al. 2019). Therefore, the second-hand transaction has aroused wide concern in society for it can provide a more efficient resource utilization. By second-hand transactions, the company can sell the equipment in the secondary market which
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