The Federal Reserve System (Fed) provides currency services to banks, including sorting currency into fit and non-fit bills and repackaging bills for redistribution. To reduce the cost of currency management operations, many banks make Fed deposits and withdrawals of the same denomination each week. In July 2007, the Fed introduced fees for making both deposits and withdrawals during a given Monday through Friday. Recognizing an opportunity, Fiserv Corporation initiated a project to optimize bank vault inventories across time and space. This article presents the integer programming model developed to assist Fiserv clients reduce the logistics cost component of cash management. The model is implemented in software using OPL. The underlying configuration is a time-space multi-commodity network with a fixed-charge cost structure. The authors report on a successful pilot study and present an efficient heuristic procedure that can be used to reduce computational solution times from hours to a few minutes.
The Federal Reserve System (Fed) provides currency services to banks, including sorting currency into fit and non-fit bills and repackaging bills for redistribution. To reduce the cost of currency management operations, many banks make Fed deposits and withdrawals of the same denomination each week. In July 2007, the Fed introduced fees for making both deposits and withdrawals during a given Monday through Friday. Recognizing an opportunity, Fiserv Corporation initiated a project to optimize bank vault inventories across time and space. This article presents the integer programming model developed to assist Fiserv clients reduce the logistics cost component of cash management. The model is implemented in software using OPL. The underlying configuration is a time-space multi-commodity network with a fixed-charge cost structure. The authors report on a successful pilot study and present an efficient heuristic procedure that can be used to reduce computational solution times from hours to a few minutes.
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