When to rebuild or when to adjust scorecards

Data-based scorecards, such as those used in credit scoring, age with time and need to be rebuilt or readjusted. Unlike the huge literature on modelling the replacement and maintenance of equipment there have been hardly any models that deal with this problem for scorecards. This paper identifies an effective way of describing the predictive ability of the scorecard and from this describes a simple model for how its predictive ability will develop. Using a dynamic programming approach one is then able to find when it is optimal to rebuild and when to readjust a scorecard. Failing to readjust or rebuild a scorecard when they aged was one of the defects in credit scoring identified in the investigations into the sub-prime mortgage crisis

A method for comparing flexibility performance for the lifecycle of manufacturing systems under capacity planning constraints

International audienceThe objective of this work is to describe a method for comparing the flexibility performance of manufacturing systems, in an uncertain environment, under lifecycle considerations and capacity planning constraints. The manufacturing systems costs are estimated over a time horizon and for a large variety of possible market scenarios. In order for the lifecycle cost values to be comparable among different systems, their values are calculated with the use of a special purpose algorithm. Statistical analysis of the estimated cost values is then employed for assessing the flexibility of each manufacturing system. The method is applied in an industrial case for checking, also from a flexibility point of view, the investment on a production system, using real life industrial data