IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Managing a Bank's Currency Inventory Under New Federal Reserve Guidelines

  • Neil Geismar


    (Department of Management and Marketing, Prairie View A& M University, P. O. Box 519, MS 2315, Prarie View, Texas 77446-0638)

  • Milind Dawande


    (School of Management, University of Texas at Dallas, 2601 North Floyd Road, Richardson, Texas 75080)

  • Divakar Rajamani


    (School of Management, University of Texas at Dallas, 2601 North Floyd Road, Richardson, Texas 75080)

  • Chelliah Sriskandarajah


    (School of Management, University of Texas at Dallas, 2601 North Floyd Road, Richardson, Texas 75080)

Registered author(s):

    New currency recirculation guidelines implemented by the Federal Reserve System (Fed) of the United States are intended to reduce the overuse of its currency processing services by depository institutions (banks). These changes are expected to have a significant impact on operating policies at those depository institutions that handle large volumes of currency. We describe two business models that capture the flow of currency between a bank and the Fed; the first model captures the current operations of most banks, while the second is expected to be adapted by many banks in response to the new guidelines. Motivated by our work with Brink's, Inc., to assess the economic impact that banks will sustain from these guidelines, we present a detailed analysis that provides managers of banks with optimal strategies to manage the flow of currency to and from the Fed for a variety of cost structures and demand patterns. Given this insight into a bank's optimal behavior, the Fed can also use our analysis to fine tune its guidelines to achieve the desired goals.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by INFORMS in its journal Manufacturing & Service Operations Management.

    Volume (Year): 9 (2007)
    Issue (Month): 2 (March)
    Pages: 147-167

    in new window

    Handle: RePEc:inm:ormsom:v:9:y:2007:i:2:p:147-167
    Contact details of provider: Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormsom:v:9:y:2007:i:2:p:147-167. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.