Linear Programming and Cash Management/CASH ALPHA
The purpose of this book is to demonstrate that management of a company's banking relations is a systems problem and that a specific quantitative technique – linear programming – can be used advantageously to make decisions on banking policy. CASH ALPHA itself is a linear programming model describing all banking activity carried on by a single company and incorporating the details of the company's agreement with its many banks on the price of specific services performed by each bank, the forms of compensation for these services, and any company policies (“over-all constraints”) with respect to one or all of its banks.
CASH ALPHA treats the company's banking activity as one integrated system; and this is its overwhelming advantage: the author demonstrates that for the book's hypothetical company, Ancama Corporation, this integrated approach to banking management reduces the cost of the banking operation by 30 per cent. As can be readily appreciated, the program is of particular value to a company with a banking system of sufficient complexity that optimum resource allocation decisions for the system as a whole are not obvious. Rather than optimizing the returns on each component of the system, as was done by Ancama before CASH ALPHA, the company can calculate by computer and thus take into account the thousands of variables offered by the system as a whole.
The CASH ALPHA program and its possible applications are fully described in this book, for the use of the financial executive and the computer specialist alike. In addition to describing the mechanics of the system, the author comments on such questions as forecasting, updating and seasonality, and general practicality. At present there is scent literature on quantitative techniques in banking operations; and CASH ALPHA, beyond being a workable, effective system in itself, is of no small value as groundbreaker.