Title: Tactics for approaching cash optimisation in bank branches

Authors: Miguel Aguilar Zaragoza; Idalia Flores De La Mota

Addresses: Universidad Nacional Autónoma de México, Av. Universidad N° 3000, C.U., Del. Coyoacán, Ciudad de México, DF. CP 04510, México ' Universidad Nacional Autónoma de México, Av. Universidad N° 3000, C.U., Del. Coyoacán, Ciudad de México, DF. CP 04510, México

Abstract: Banks, through their branches, offer cash transactions as a key service, so any lack of available cash is a critical issue, since it affects the prestige of the entire bank not just of that branch in particular. This paper aims to establish a vault policy, that lets the staff know how to manage the branch's money efficiently, by handling orders to the central vaults with realistic assumptions and easy-to-implement criteria. We present a model based on dynamic programming principles, to represent the problem and generate an input for the vault policy. Other inputs for the policy are some parameters set according to a branch's demand for a cash transactions approach, from the perspective that the best fit is between frequentist and Bayesian. With these inputs and a definition of some 'intuitive' rules we can implement and assess the vault policy. The results for 30 branches are presented.

Keywords: dynamic programming; compound processes; generalised linear models; GLMs; integrated nested Laplace approximation; INLA; cash optimisation; bank branches; banking industry; modelling; cash transactions; vault policy.

DOI: 10.1504/IJSPM.2016.082913

International Journal of Simulation and Process Modelling, 2016 Vol.11 No.6, pp.492 - 503

Available online: 14 Mar 2017 *

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