User:Echikaro

Decision Science – an approach (discipline) to making complex business decisions, involving multiple trade-offs, through selection of an optimal path. Optimal path is measured by the degree to which a chain of decisions results in meeting a certain quantifiable objective (goal function). The goal function is usually described as a mathematical function having dependency on both deterministic and stochastic variables. The underlying variables are quantified or modeled based on historic experience, expert or management assumptions and industry data.

Decision Science in Finance & Banking – methodology of analyzing a portfolio of assets which leads to optimization of a goal function. A typical goal in managing portfolios of assets is to maximize risk adjusted return, pre-tax income or net profit. Portfolios may be comprised of assets such as consumer or commercial loans, or publicly traded and private securities, real estate, etc.

In managing portfolios of consumer loans and credit card receivables, Decision Science is commonly utilized to determine a set of actions that will yield maximum risk adjusted return over a short or a long time horizon. Once an optimal set of actions is chosen it is first tested on a targeted sample of customers and subsequently implemented across segments of the portfolio. Portfolio Segments (Customer Segments) are pools of customers with common characteristics or behaviors. Customer characteristics may include demographic data, such as age, geographic location, income level or Behavior Data, such as, credit scores, spending patterns, payment history, etc