ATM cash management for a South African retail bank

Du Toit, Delyno Johannes (Stellenbosch : Stellenbosch University, 2011-12)

Thesis (MScEng)--Stellenbosch University, 2011.

Thesis

ENGLISH ABSTRACT: Cash can be seen as a fast moving consumer good. Approaching cash as inventory within the ATM cash management environment of a South African retail bank, provided the opportunity to apply well known industrial engineering techniques to the financial industry. This led to the application of forecasting, inventory management, operational research and simulation methods. A forecasting model is designed to address the multiple seasonalities and calendar day effects that is prevalent in the demand for cash. Special days, e.g. paydays, lead to an increase in demand for cash. The weekday on which the special day falls will also influence the demand. The multiplicative Holt-Winters method is combined with an improvised distribution method to determine the demand for cash for the region and per ATM. Reordering points are calculated and simulated to form an understanding of the effect this will have on the ATM network. Direct replenishment and the traveling salesman problem is applied and simulated to determine the difference in using one or the other. Various simulation models are build to test the operational and financial impact when certain variables are amended. It is evident that more work is required to determine the optimal combination of variable values, i.e. forecasting frequency, aggregate forecasting or individual forecasting, reorder levels, loading levels, lead times, cash swap or cash add, and the type of transportation method. Each one of these are a science in itself and cannot be seen (calculated) in isolation from the other as a change in one can affect the overall operational efficiency and costs of the ATM network. The thesis proves that significant cost savings is possible, compared to the current set-up, when applying industrial engineering techniques to a geographical ATM network within South Africa.

AFRIKAANSE OPSOMMING: Kontant kan gesien word as vinnig bewegende verbruikersgoedere. Deur kontant te benader as voorraad binne die ATM kontant bestuur omgewing van ’n Suid Afrikaanse kleinhandelsbank, het dit die geleentheid geskep om bekende bedryfsingenieurstegnieke toe te pas in die finansiële industrie. Dit het gelei tot die toepassing van vooruitskatting, voorraadbestuur, operasionele navorsing en simulasie metodes. ’n Vooruitskattingsmodel is ontwerp om die verskeie seisoenaliteite en kalenderdae effekte wat deel uitmaak van die vraag na kontant aan te spreek. Spesiale dae, bv. betaaldae, lei tot ’n toename in die vraag na kontant. Die weeksdag waarop die spesiale dag voorkom sal ook ’n invloed hê op die vraag. Die multiplikatiewe Holt-Winters metode is gekombineer met ’n geïmproviseerde verspreidingsmetode om die vraag na kontant vir die streek en per ATM the bepaal. Bestellingsvlakke is bereken en gesimuleer om ’n prentjie te skep van die invloed wat dit op die ATM netwerk sal hê. Direkte hervulling en die handelsreisigerprobleem is toegepas en gesimuleer om die verskille te bepaal tussen die gebruik van of die een of die ander. Veskeie simulasie modelle is gebou om die operasionele en finansiële impak te toets, wanneer sekere veranderlikes aangepas word. Dit is duidelik dat meer werk nodig is om die optimale kombinasie van veranderlike waardes te bepaal, bv. vooruitskatting frekwensie, totale vooruiskatting of individuele vooruitskatting, bestellingsvlakke, leitye, kontant omruiling of kontant byvoeging, en die tipe vervoermetode. Elkeen van hierdie is ’n wetenskap op sy eie en kan nie in isolasie gesien en bereken word nie, want ’n verandering van een se waarde kan die hele operasionele doeltreffendheid en kostes van die ATM netwerk beïnvloed.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/17977
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