Mr. Brown is the manager for a retail bank in Malaysia, the bank issues credit card to profitable customers. Usually, the credit score of a customer in terms of his or her projected probability of being a profitable customer. A typical scoring table are given in TABLE Q3(a).

 
 

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TABLE Q3(a): Points table Age Under 25 25-29 30-34 35 + (12 points) (5 points) (3 points) (18 points) Time at same <1 year 3-4 years |(13 points) 3-4 years 1-2 years 5 + years address (0 points) (9 points) (20 points) Car age <1 year 1-2 years 5 + years (18 points) (12 points) (10 points) (5 points) RM 100-200 RM 201- 300 RM 300+ Monthly car loan payment (15 points) Housing loan None None (6 points) (3 points) (1 point) RM 250-500 RM 500 – 1000 RM 1000+ payment (24 points) (15 points) (10 points) (1 point) Fixed deposit Both / Savings Savings only Deposit only None (15 points) (5 points) (10 points) (0 point) account The score is the sum of the points on the six items. The TABLE Q3(b) is then used to convert scores into the probability of being a profitable customer. TABLE Q3(b): probability values Score 30 40 50 60 70 80 >80 Probability 0.70 0.75 0.80 0.85 0.90 0.95 0.97 Three potential customers are applied for a new credit card. The manager interest to provide only one out of three customers who scored maximum projected probability of a profitable customer. Customer details are given in TABLE Q3(c). TABLE Q3(a): Points table Age Under 25 25-29 30-34 35 + (12 points) (5 points) (3 points) (18 points) Time at same <1 year 3-4 years |(13 points) 3-4 years 1-2 years 5 + years address (0 points) (9 points) (20 points) Car age <1 year 1-2 years 5 + years (18 points) (12 points) (10 points) (5 points) RM 100-200 RM 201- 300 RM 300+ Monthly car loan payment (15 points) Housing loan None None (6 points) (3 points) (1 point) RM 250-500 RM 500 – 1000 RM 1000+ payment (24 points) (15 points) (10 points) (1 point) Fixed deposit Both / Savings Savings only Deposit only None (15 points) (5 points) (10 points) (0 point) account The score is the sum of the points on the six items. The TABLE Q3(b) is then used to convert scores into the probability of being a profitable customer. TABLE Q3(b): probability values Score 30 40 50 60 70 80 >80 Probability 0.70 0.75 0.80 0.85 0.90 0.95 0.97 Three potential customers are applied for a new credit card. The manager interest to provide only one out of three customers who scored maximum projected probability of a profitable customer. Customer details are given in TABLE Q3(c).

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1 Facts Bank issues credit card to the highest profitable customers Following steps are used to determine which customer is most profitable a We have ... View the full answer