Abstract: Throughout this paper, a relatively new technique, the Tabu search variable selection model, is elaborated showing how it can be efficiently applied within the financial world whenever researchers come across the selection of a subset of variables from a whole set of descriptive variables under analysis. In the field of financial prediction, researchers often have to select a subset of variables from a larger set to solve different type of problems such as corporate bankruptcy prediction, personal bankruptcy prediction, mortgage, credit scoring and the Arbitrage Pricing Model (APM). Consequently, to demonstrate how the method operates and to illustrate its usefulness as well as its superiority compared to other commonly used methods, the Tabu search algorithm for variable selection is compared to two main alternative search procedures namely, the stepwise regression and the maximum R 2 improvement method. The Tabu search is then implemented in finance; where it attempts to predict corporate bankruptcy by selecting the most appropriate financial ratios and thus creating its own prediction score equation. In comparison to other methods, mostly the Altman Z-Score model, the Tabu search model produces a higher success rate in predicting correctly the failure of firms or the continuous running of existing entities.
Abstract: In this paper, the Tabu search algorithm is used to
solve a transportation problem which consists of determining the
shortest routes with the appropriate vehicle capacity to facilitate the
travel of the students attending the University of Mauritius. The aim
of this work is to minimize the total cost of the distance travelled by
the vehicles in serving all the customers. An initial solution is
obtained by the TOUR algorithm which basically constructs a giant
tour containing all the customers and partitions it in an optimal way
so as to produce a set of feasible routes. The Tabu search algorithm
then makes use of a search procedure, a swapping procedure and the
intensification and diversification mechanism to find the best set of
feasible routes.
Abstract: The aim of this paper is to express the input-output
matrix as a linear ordering problem which is classified as an NP-hard
problem. We then use a Tabu search algorithm to find the best
permutation among sectors in the input-output matrix that will give
an optimal solution. This optimal permutation can be useful in
designing policies and strategies for economists and government in
their goal of maximizing the gross domestic product.