Processing center location analysis for multiple branch banks

Abstract

Recently banks in the United States and Great Britain have acquired large numbers of branch offices. These banks have just begun to recognize that the operations arm of their business must be restructured and consolidated to take advantage of the economies of scale possible with a multibranch system. This entails the identification of the appropriate number and location of regional check processing centers and the assignment of individual branches to each center. A network transshipment model (or netform) has been developed to aid management in this critical, strategic decision. Used in conjunction with a simulation model which analyzes the minute by minute flow of work, the transshipment model suggests preferred processing sites and branch assignments. Using data collected from a bank recently involved in the process, the use of the model is illustrated.