VA-TX Credit Card Case.pptVIP

VA-TX Credit Card Case John F. Kros Assistant Professor of Decision Sciences East Carolina University Christopher M. Keller Visiting Professor Operations and Decision Technology Indiana University VA-TX Credit Card Case San Antonio Presentation Background All MBA’s, 1st Case Jumpstarts basic quantitative methods Agenda Introduction Example Conclusion VA-TX Credit Card Case  The Scientific Method Apparent Issue Increasing credit-card profitability Inherent Issue Scientific MethodAssumptions ? Ambiguity ? Opportunity/Risk ? Analysis- Best case/Worse Case, Tradeoff Curves, What-If, OR/MS VA-TX Credit Card Case Case Overview Student Work Groups Written Executive Summary In Class Presentation Case Decision Structure Status Quo Ad Campaign Increase Credit Card Limits VA-TX Credit Card Case Example Nicole’s group estimated that 25% of card holders do not carry a balance from month to month, or the balances they carry are negligible. However, of those customers that hold balances, 95% hold between $100 and $300 a year. VA-TX charges a 15% APR on all credit card balances while their cost of capital is 5% APR. Data shows that default rates are currently about 0.01% for the customer card base and credit limits are set at a maximum of $5000 per customer. VA-TX Credit Card Case Other Observations Global Parameter Modeling Trade-Off versus Recommendation Validity and Sufficiency of Case Information VA-TX Credit Card Case Classroom Success Simultaneous sections by different instructors in each semester for the past three years. Students report importance of exemplar work with interactive instructor feedback. VA-TX Credit Card Case … interviewees are not expected to produce the right answer (although they get bonus credit if they do). Instead, the interviewer wants to observe the interviewees’ thought processes – what assumptions do they make, what questions do they ask, how do they frame the problem, what outside data and facts do they bring to bear on