Issue link: https://industrialengineer.epubxp.com/i/905872
52 ISE Magazine | www.iise.org/ISEmagazine system design, such as the interest rate charged and the order in which mem- bers receive collected funds, have been set by custom without any analytical ba- sis. In "Analysis and Design of Micro- finance Services: A Case of ROSCA," Dohyun Ahn, Wanmo Kang, Kyoung- Kuk Kim and Hayong Shin of KAIST, South Korea, present several conditions that would make a ROSCA more ben- eficial for investors when compared to formal banking systems. By consider- ing the difference between profits from participating in a ROSCA and profits from using banking transactions, the authors develop optimization prob- lems to achieve an optimal design for a ROSCA. One finding from this research is that it is better for investors or entrepre- neurs to join such a microfinance ser- vice when deposit and loan rates from formal banking systems are not favor- able. This implies that ROSCA can serve as an alternative investment tool for entrepreneurs who take a relatively weak position in terms of funding; e.g., small-to-medium enterprises in devel- oping countries. Furthermore, the authors derive the interest rate that should be used in the ROSCA to maximize the system out- put and report in what order members should receive the collected funds. The results from this pioneering study are expected to encourage additional ana- lytical studies on informal financial ser- vices that are often overlooked. CONTACT: Kyoung-Kuk Kim; kkim3128@kaist. ac.kr; Department of Industrial and Systems En- gineering, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon, South Korea 305-701. Jia ju Ja ) Shi is the Caroly . Stew- art Chair a d Professor i he H. Milto Stewart School of I dustrial a d Systems E gi eeri g at the Georgia I stitute of Tech- ology. He is editor-i -chief of IISE Trans- actions a d a fellow of IISE, ASME a d INFORMS. Sarah M. Rya s the Joseph Walkup Pro- fessor of I dustrial a d Ma ufacturi g Sys- tems E gi eeri g at Iowa State U iversity. She is editor-i -chief of The Engineering Economist a d a fellow of IISE. Hayong Shin (from left), Dohyun Ahn, Kyoung-Kuk Kim and Wanmo Kang are diving into the previously unresearched area of rotating savings and credit associations. IISE Transactions is IISE's flagship research journal and is published monthly. It aims to foster exchange among researchers and practitioners in the industrial engineering community by publishing papers that are grounded in science and mathematics and motivated by engineering applications. The Engineering Economist is a quarterly refereed journal published jointly by IISE and the American Society of Engineering Education. Devoted to issues of capital investment, its topics include economic decision analysis, capital investment analysis, research and development decisions, cost estimating and accounting, and public policy analysis. To subscribe, call (800) 494-0460 or (770) 449-0460. About the journals