Multi-objective optimisation with stochastic discrete-event simulation in retail banking: a case study

E Scholtz, J Bekker, D Du Toit

Abstract


The cash management of an autoteller machine (ATM) is a multi-objective optimisation problem which aims to maximise the service level provided to customers at minimum cost. This paper focus on improved cash management in a section of the South African retail banking industry, for which a decision support system (DSS) was developed. This DSS integrates four Operations Research (OR) methods: the vehicle routing problem (VRP), the continuous review policy for inventory management, the knapsack problem and stochastic, discrete-event simulation. The DSS was applied to an ATM network in the Eastern Cape, South Africa, to investigate 90 different scenarios. Results show that the application of a formal vehicle routing method consistently yields higher service levels at lower cost when compared to two other routing approaches, in conjunction with selected ATM reorder levels and a knapsack-based notes dispensing algorithm. It is concluded that the use of vehicle routing methods is especially beneficial when the bank has substantial control over transportation cost.

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DOI: https://doi.org/10.5784/28-2-116

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ISSN 2224-0004 (online); ISSN 0259-191X (print)

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