Consumer finance: challenges for operational research

Consumer finance has become one of the most important areas of banking, both because of the amount of money being lent and the impact of such credit on global economy and the realisation that the credit crunch of 2008 was partly due to incorrect modelling of the risks in such lending. This paper reviews the development of credit scoring—the way of assessing risk in consumer finance—and what is meant by a credit score. It then outlines 10 challenges for Operational Research to support modelling in consumer finance. Some of these involve developing more robust risk assessment systems, whereas others are to expand the use of such modelling to deal with the current objectives of lenders and the new decisions they have to make in consumer finance. <br/

Operations research in consumer finance: challenges for operational research

Consumer finance has become one of the most important areas of banking both because of the amount of money being lent and the impact of such credit on the global economy and the realisation that the credit crunch of 2008 was partly due to incorrect modelling of the risks in such lending. This paper reviews the development of credit scoring,-the way of assessing risk in consumer finance- and what is meant by a credit score. It then outlines ten challenges for Operational Research to support modelling in consumer finance. Some of these are to developing more robust risk assessment systems while others are to expand the use of such modelling to deal with the current objectives of lenders and the new decisions they have to make in consumer financ

An Improved Stock Price Prediction using Hybrid Market Indicators

In this paper the effect of hybrid market indicators is examined for an improved stock price prediction. The hybrid market indicators consist of technical, fundamental and expert opinion variables as input to artificial neural networks model. The empirical results obtained with published stock data of Dell and Nokia obtained from New York Stock Exchange shows that the proposed model can be effective to improve accuracy of stock price prediction

A comparison of fuzzy approaches to e-commerce review rating prediction

This paper presents a comparative analysis of the performance of fuzzy approaches on the task of predicting customer review ratings using a computational intelligence framework based on a genetic algorithm for data dimensionality reduction. The performance of the Fuzzy C-Means (FCM), a neurofuzzy approach combining FCM and the Adaptive Neuro Fuzzy Inference System (ANFIS), and the Simplified Fuzzy ARTMAP (SFAM) was compared on six datasets containing customer reviews. The results revealed that all computational intelligence predictors were suitable for the rating prediction problem, and that the genetic algorithm is effective in reducing the number of dimensions without affecting the prediction performance of each computational intelligence predictor

Detecting Multiple Communities Using Quantum Annealing on the D-Wave System

A very important problem in combinatorial optimization is partitioning a network into communities of densely connected nodes; where the connectivity between nodes inside a particular community is large compared to the connectivity between nodes belonging to different ones. This problem is known as community detection, and has become very important in various fields of science including chemistry, biology and social sciences. The problem of community detection is a twofold problem that consists of determining the number of communities and, at the same time, finding those communities. This drastically increases the solution space for heuristics to work on, compared to traditional graph partitioning problems. In many of the scientific domains in which graphs are used, there is the need to have the ability to partition a graph into communities with the ``highest quality'' possible since the presence of even small isolated communities can become crucial to explain a particular phenomenon. We have explored community detection using the power of quantum annealers, and in particular the D-Wave 2X and 2000Q machines. It turns out that the problem of detecting at most two communities naturally fits into the architecture of a quantum annealer with almost no need of reformulation. This paper addresses a systematic study of detecting two or more communities in a network using a quantum annealer

Performance Evaluation for the Sustainable Supply Chain Management

Supply chain SC activities transform natural resources, raw materials, and components into various finished products that are delivered to end customers. A high efficient SC would bring great benefits to an enterprise such as integrated resources, reduced logistics costs, improved logistics efficiency, and high quality of overall level of services. In contrast, an inefficient SC will bring additional transaction costs, information management costs, and resource waste, reduce the production capacity of all enterprises on the chain, and unsatisfactory customer relationships. So the evaluation of a SC is important for an enterprise to survive in a competitive market in a globalized business environment. Therefore, it is important to research the various methods, performance indicator systems, and technology for evaluating, monitoring, predicting, and optimizing the performance of a SC. A typical procedure of the performance evaluation (PE) of a SC is to use the established evaluation performance indicators, employ an analytical method, follow a given procedure, to carry out quantitatively or qualitatively comparative analysis to provide the objective and accurate evaluation of a SC performance in a selected operation period. Various research works have been carried out in proposing the performance indicator systems and methods for SC performance evaluations. But there are no widely accepted indicator systems that can be applied in practical SC performance evaluations due to the fact that the indicators in different systems have been defined without a common understanding of the meanings and the relationships between them, and they are nonlinear and very complicated

Performance Measurement of Supply Chain Management: A Decision Framework for Evaluating and Selecting Supplier Performance in a Supply Chain

Supply Chain Management (SCM) has gained significance as one of the 21st century manufacturing paradigms for improving organizational competitiveness. Supply chain ensures improved efficiency and effectiveness of not only product transfer, but also information sharing between the complex hierarchies of all the tiers. The literature on SCM that deals with strategies and technologies for effectively managing a supply chain is quite vast. In recent years, organizational performance measurement (PM) and metrics have received much attention from researchers and practitioners. Performance measurement and metrics have an important role to play in setting objectives, evaluating performance, and determining future courses of actions. Apart from the common criteria such as cost and quality, ten other performance measurements are defined, visibility, trust, innovativeness, delivery reliability, flexibility and responsiveness, resource utilization, cost, assets, technological capability, service and time to market, so total twelve criteria and fifty eight subcriteria are used to evaluate the performance in supply chain. So, for evaluating and selecting supplier a multi-attribute decision-making technique, an analytic hierarchy process (AHP), is used to make decision based on the priority of performance measures. This paper describes a decision framework for evaluating and selecting supplier performance in a supply chain. A case study from the automotive industry is used to demonstrate the AHP technique

Learning to Extract Keyphrases from Text

Many academic journals ask their authors to provide a list of about five to fifteen key words, to appear on the first page of each article. Since these key words are often phrases of two or more words, we prefer to call them keyphrases. There is a surprisingly wide variety of tasks for which keyphrases are useful, as we discuss in this paper. Recent commercial software, such as Microsoft?s Word 97 and Verity?s Search 97, includes algorithms that automatically extract keyphrases from documents. In this paper, we approach the problem of automatically extracting keyphrases from text as a supervised learning task. We treat a document as a set of phrases, which the learning algorithm must learn to classify as positive or negative examples of keyphrases. Our first set of experiments applies the C4.5 decision tree induction algorithm to this learning task. The second set of experiments applies the GenEx algorithm to the task. We developed the GenEx algorithm specifically for this task. The third set of experiments examines the performance of GenEx on the task of metadata generation, relative to the performance of Microsoft?s Word 97. The fourth and final set of experiments investigates the performance of GenEx on the task of highlighting, relative to Verity?s Search 97. The experimental results support the claim that a specialized learning algorithm (GenEx) can generate better keyphrases than a general-purpose learning algorithm (C4.5) and the non-learning algorithms that are used in commercial software (Word 97 and Search 97)