9.7.3 Further Optimizations

When combined to produce a balanced forecast for a particular product member, it could result in a large number of new originations on different dates, because of all these methods. The logic finds the earliest date and the latest date of all the different possible originations and adds only new business on these two dates within the bucket.

The first and last plug dates are determined by finding the minimum and maximum date overall average date values. For example, given an average runoff date for payments of 13.4 and an average plug date for maturing balances of 15.6, four plug dates will be derived: 13, 14, 15, and 16. The first plug date will be the minimum date, the 13th. The second plug date will be the maximum plug date, the 16th.

When determining how much of the run-off balance to plug on each date, the calculation will be done as follows:

• Plug Balance(first plug ) = Run-off * (first plug date - average run-off date) / (second plug date - first plug date)
• Plug Balance (second plug ) = Run-off * (second plug date - average run-off date) / (second plug date - first plug date)

Note:

When New Business origination method is Distributed, engine solves to derive Origination Date. This logic uses inputs from all scenario(s) in a process, and derives Origination date for future modeled records. These future modeled records are consistent for all scenario(s) in a process. Origination balance then get calculated for these records for each specific scenario.

When forecast rate scenario(s) of Process A, has different forecast rates in comparison to another Process B (although a specific scenario of Process A and B can be same and have same forecast rates), New Business future modeled records for Process A would have different origination date and origination balance when compared to Process B.