Optimization of Bank Transit Check Clearing Operations

Management Science · 1985 · Volume 31 · Issue 9

Abstract

The passage of the Depository Institutions Deregulation and Monetary Control Act of 1980 has created a major change in the banking system of the United States, in that the Federal Reserve began charging for its check clearing and collection services September 1, 1981. The result from the passage of this legislation has been major changes in bank check clearing arrangements, in that greater check clearing efficiency is now required to offset the increased clearing costs. This paper describes the development of an integer programming model which has been used to determine the set of clearing arrangements and associated transportation connections that optimizes a bank’s transit check clearing system in this new environment.

Keywords

financial institutions: banks, programming: integer, applications

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