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Stochastic optimization approach of car value depreciation
Author(s) -
Alshamary Bader,
Calin Ovidiu
Publication year - 2012
Publication title -
applied stochastic models in business and industry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.413
H-Index - 40
eISSN - 1526-4025
pISSN - 1524-1904
DOI - 10.1002/asmb.1911
Subject(s) - depreciation (economics) , erlang (programming language) , dividend , poisson distribution , stochastic process , econometrics , stochastic modelling , poisson process , value (mathematics) , mathematical optimization , asset (computer security) , computer science , mathematical economics , economics , mathematics , microeconomics , finance , statistics , profit (economics) , functional programming , computer security , theoretical computer science , financial capital , capital formation
This paper presents a stochastic model for a car's value and its depreciation under random repairs modeled by a Poisson process; the usage functional is defined, and the optimal selling time is estimated. Exact or approximative formulas are provided where possible. The car's value is evaluated as an asset with negative return and paying random normally distributed dividends at stochastic times, which are Erlang distributed. Copyright © 2012 John Wiley & Sons, Ltd.