Modelling and optimization of ATM cash-loading under stochastic demand

A set of ATMs in commercial areas were considered for business transactions. Customer demand for money requires prompt cash supply; to harmonize optimality options for ATM cash loading to sustain customers. We formulated this tis decision as a multi-stage stochastic process with Markovian demand of ATM cash among customers. The loading and operations of the ATMs were governed by cash demand and supply; with unit (loading, operational, and shortage) costs. The study considered the ATM cash demand of ten ATMs in regions within commercial centres of Kampala city. The relevant data was collected every hour throughout four months. The task focused on optimizing cash-loading decisions that minimize the operational costs of managing ATMs. The optimality of cash loading decisions were determined using the Markov decision processes. The tested model revealed optimal state-dependent options and operational costs of managing ATMs cost-effectively. As a cost optimization strategy for managers in the banking industry, the productivity of ATMs towards improved efficiency and utilization of resources for cash provision to customers emerged; supporting a larger customer base for business transactions.