A new dimension of profit-sharing ratio determination of aitab contract mathematical modelling using stochastic optimisation approach

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1 Citation (Scopus)

Abstract

This paper discusses the problem of determining the profit-sharing ratio for Islamic hire-purchase contract named Al-Ijara Thumma Al-Bai' or AITAB. AITAB originated from and is widely used in Malaysia. This paper presents an approach which maximises the profits of the participating parties in the hire-purchase instrument by implementing the fair profit-sharing ratio determination. First, the AITAB agreement is discussed followed by the mathematical formulation of the proposed profit-sharing ratio (PSR) determination using stochastic programming. The result of this study is the mathematical formulation of PSR for the AITAB contract which is more appropriate and Shari'ah compliant if compared to the formulation currently used.

Original languageEnglish
Pages (from-to)193-200
Number of pages8
JournalJournal of Sustainability Science and Management
Volume7
Issue number2
Publication statusPublished - 2012

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profit sharing
mathematical modeling
Profitability
modeling
purchase
Stochastic programming
Malaysia
profit
programming
contract

Keywords

  • Islamic finance
  • Islamic hire-purchase
  • Profit-sharing ratio determination

ASJC Scopus subject areas

  • Management, Monitoring, Policy and Law
  • Pollution
  • Geography, Planning and Development

Cite this

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title = "A new dimension of profit-sharing ratio determination of aitab contract mathematical modelling using stochastic optimisation approach",
abstract = "This paper discusses the problem of determining the profit-sharing ratio for Islamic hire-purchase contract named Al-Ijara Thumma Al-Bai' or AITAB. AITAB originated from and is widely used in Malaysia. This paper presents an approach which maximises the profits of the participating parties in the hire-purchase instrument by implementing the fair profit-sharing ratio determination. First, the AITAB agreement is discussed followed by the mathematical formulation of the proposed profit-sharing ratio (PSR) determination using stochastic programming. The result of this study is the mathematical formulation of PSR for the AITAB contract which is more appropriate and Shari'ah compliant if compared to the formulation currently used.",
keywords = "Islamic finance, Islamic hire-purchase, Profit-sharing ratio determination",
author = "Halim, {Nurfadhlina Abdul} and {Jaaman @ Sharman}, {Saiful Hafizah} and Noriszura Ismail and Ahmad, {Rokiah @ Rozita}",
year = "2012",
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journal = "Journal of Sustainability Science and Management",
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AU - Halim, Nurfadhlina Abdul

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AU - Ismail, Noriszura

AU - Ahmad, Rokiah @ Rozita

PY - 2012

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N2 - This paper discusses the problem of determining the profit-sharing ratio for Islamic hire-purchase contract named Al-Ijara Thumma Al-Bai' or AITAB. AITAB originated from and is widely used in Malaysia. This paper presents an approach which maximises the profits of the participating parties in the hire-purchase instrument by implementing the fair profit-sharing ratio determination. First, the AITAB agreement is discussed followed by the mathematical formulation of the proposed profit-sharing ratio (PSR) determination using stochastic programming. The result of this study is the mathematical formulation of PSR for the AITAB contract which is more appropriate and Shari'ah compliant if compared to the formulation currently used.

AB - This paper discusses the problem of determining the profit-sharing ratio for Islamic hire-purchase contract named Al-Ijara Thumma Al-Bai' or AITAB. AITAB originated from and is widely used in Malaysia. This paper presents an approach which maximises the profits of the participating parties in the hire-purchase instrument by implementing the fair profit-sharing ratio determination. First, the AITAB agreement is discussed followed by the mathematical formulation of the proposed profit-sharing ratio (PSR) determination using stochastic programming. The result of this study is the mathematical formulation of PSR for the AITAB contract which is more appropriate and Shari'ah compliant if compared to the formulation currently used.

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