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Making Change

Posted by michael on from the buddy-can-you-spare-an-eighteener? dept.

Roland Piquepaille writes "There are mostly four kinds of coins in circulation in the U.S: 1 cent, 5 cents, 10 cents, and 25 cents. But is it the most efficient way to give back change? This Science News article says that a computer scientist has found an answer. "For the current four-denomination system, [Jeffrey Shallit of the University of Waterloo] found that, on average, a change-maker must return 4.70 coins with every transaction. He discovered two sets of four denominations that minimize the transaction cost. The combination of 1 cent, 5 cents, 18 cents, and 25 cents requires only 3.89 coins in change per transaction, as does the combination of 1 cent, 5 cents, 18 cents, and 29 cents." He also found that change could be done more efficiently in Canada with the introduction of an 83-cent coin and in Europe with the addition of a 1.33- or 1.37-Euro coin. Check this column for more details and references." The paper (postscript) is online.

6 of 935 comments (clear)

  1. Instead... by frodo+from+middle+ea · · Score: 5, Insightful

    Why not just get rid of silly prices like 99.99 and 4.37 and 1.49. ?
    Why not round prices to dimes ? Or even quarters ?

    --
    for the last time people, I am "frodo from middle eaRTH", not "middle eaST".
    1. Re:Instead... by GospelHead821 · · Score: 5, Insightful

      They're not trying to fool anybody. At least, that was not the original intent of setting prices at $9.99 instead of $10.00. It was a technique that was intended to help keep cashiers honest. If an item cost exactly $10.00, the cashier didn't need to open the drawer to get change for the customer. At some point, it was determined that cashiers who did not have to open the drawer were statistically more likely to pocket the money themselves than to put it in the register. So prices were dropped by a penny to force the cashier to open up the cash drawer, to get change for the customer, thus increasing the statistical likelihood that company gets its money.

      --
      Virtue finds and chooses the mean.
      Aristotle, Ethica Nichomachea
  2. Re:I hate math... by Khasmo · · Score: 5, Insightful

    Beyond that, it also means the cashier would have to figure out what the most efficient combination of change is . . for 0.36 don't give a quater two nickels and a penny, just give two 0.18 coins.

    The logic for determining change is really easy for a cashier. start with the largest coin and work your way down until it all adds up.

  3. Re:Yeah Right... by gentgeen · · Score: 5, Insightful

    It's funny (in a VERY sad way) that to him, the cash register was this magic oracle that told him what to do, and that it didn't occur to him that what he was doing was even knowable without its use.

    I am a High School math teacher, and I can't agree with this statement enough. Somedays I laugh, somedays I cry, but it is always sad when I see a student need the calculator for the most BASIC of operations (And I am not even counting the OP's example as "basic", that would be "basic+")

    I think it all comes from the fact that students are allowed to use calculators at such an earlier point in thier schooling. I am only 29, but I was not allowed to use a calculator in school until somewhere around 11th grade. It really hones (sp?) those basic math skills. I'll step off my soap-box now Sorry ;-}

  4. Re:Yeah Right... by ip_vjl · · Score: 5, Insightful

    I don't blame people for not being able to do math in their head. I know some smart people that have trouble doing calculations without paper. My wife was a math major in college, and she sometimes has problems doing calculations in her head.

    The thing that struck me about this guy was that it wasn't even that he couldn't do the math in his head ... he wasn't even aware that there was something that he could do to arrive at the answer. It's as if he didn't know that math even existed.

  5. A "Scientist" wrote this!?!?!?!? by radulovich · · Score: 5, Insightful

    This article is a complete waste of time. This might be a fun paper for a discussion about coinage, but it fails horribly when taken as practical advice.

    The US does not need another coin. Indeed, the *opposite* is true. If you get rid of the penny, you can increase efficiency tremendously, to only 2.75 coins per transaction, and a whopping 45% of transactions would require 2 or fewer coins!

    Many people oppose the elimination of the penny, but bear with me for a moment. Consider the following issues:

    - Pennies cannot be used in vending machines, and therefore are not as "spendable" as all the other coins.

    - Prices will not rise as people think they will; they will fall instead! Everything that is priced at $n.99 will now be $n.95 instead (marketers HATE to price in round dollars because it makes their prices look higher). All other numbers will be rounded to the nearest $n.n5.

    - The US government makes 12 billion pennies at a cost of $100 million each year (http://www.retirethepenny.org/), which could be put to better use than filling up my coin jar.

    - Half of these pennies will disappear from circulation within a year! (http://www.shepherd-express.com/shepherd/19/41/ne ws_and_views/straight_dope.html)

    - Counting out pennies costs the economy an estimated $20 billion in productivity annually (http://www.retirethepenny.org/)

    - The U.S. Mint loses $8 million a year manufacturing pennies. (http://www.shepherd-express.com/shepherd/19/41/ne ws_and_views/straight_dope.html)

    Think about it - do you *really* want another coin in your pocket? Thank God that politicians don't listen to us all the time!

    -Mark