EconPapers    
Economics at your fingertips  
 

Cash Demand Forecasting in ATMs by Clustering and Neural Networks

V. Kamini, V. Ravi (), A. Prinzie and Dirk Van den Poel ()

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: To improve ATMs’ cash demand forecasts, this paper advocates the prediction of cash demand for groups of ATMs with similar day-of-the week cash demand patterns. We first clustered ATM centers into ATM clusters having similar day-of-the week withdrawal patterns. To retrieve “day-of-the-week” withdrawal seasonality parameters (effect of a Monday, etc) we built a time series model for each ATMs. For clustering, the succession of 7 continuous daily withdrawal seasonality parameters of ATMs is discretized. Next, the similarity between the different ATMs’ discretized daily withdrawal seasonality sequence is measured by the Sequence Alignment Method (SAM). For each cluster of ATMs, four neural networks viz., general regression neural network (GRNN), multi layer feed forward neural network (MLFF), group method of data handling (GMDH) and wavelet neural network (WNN) are built to predict an ATM center’s cash demand. The proposed methodology is applied on the NN5 competition dataset. We observed that GRNN yielded the best result of 18.44% symmetric mean absolute percentage error (SMAPE), which is better than the result of Andrawis et al. (2011). This is due to clustering followed by a forecasting phase. Further, the proposed approach yielded much smaller SMAPE values than the approach of direct prediction on the entire sample without clustering. From a managerial perspective, the clusterwise cash demand forecast helps the bank’s top management to design similar cash replenishment plans for all the ATMs in the same cluster. This cluster-level replenishment plans could result in saving huge operational costs for ATMs operating in a similar geographical region.

Keywords: Time Series; Neural Networks; SAM method; Clustering; ATM Cash withdrawal forecasting (search for similar items in EconPapers)
Pages: 29 pages
Date: 2013-11
New Economics Papers: this item is included in nep-cmp and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://wps-feb.ugent.be/Papers/wp_13_865.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:13/865

Access Statistics for this paper

More papers in Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration Contact information at EDIRC.
Bibliographic data for series maintained by Nathalie Verhaeghe ().

 
Page updated 2022-10-05
Handle: RePEc:rug:rugwps:13/865