More Practice Questions _Inv.Mgt 2011_Ans_Revised

More Practice Questions _Inv.Mgt 2011_Ans_Revised -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Questions for Review Session-EMBA30_Revised Problem 6.6 Anu What is the optimal $ a bank put in its ATM? Given that: Fixed cost of filling an ATM m/c (S) = $100. Average withdrawal: $80 and 150 transactions per year Interest rate 10% pa simple, (No withdrawal fee) So unit holding cost, H = $0.10 / year (remember the bank is paying its depositors 10% on the money that sits in the ATM, cannot lend out that money locked up in the ATM, and does not charge a withdrawal fee) So annual demand R (D in our formula) is estimated to be = 150*80 = 12,000. Then, the economic quantity of money to place in the ATM machine, everytime the bank replenishes the ATM, is given by the EOQ formula: The number of times the ATM needs to be filled = R/Q = 12000/4898 = 2.45 per year. Problem 7.3 Anu 7.3 The Home and Garden (HG) chain of superstores imports decorative planters from Italy. Weekly demand for planters averages 1,500 with a standard deviation of 800. Each planter costs $10. HG incurs a holding cost of 25% per year to carry inventory. HG has an opportunity to set up a superstore in the Phoenix region. Each order shipped from Italy incurs a fixed transportation and delivery cost of $10,000. Consider 52 weeks in the year. (a) The optimal order quantity of planters for HG is (i) About 24,980 (ii) About 3,464 (iii) About 78,994 (iv) None of the above H = 25% of the product cost = .25*10 = $2.5 holding cost per piece per year
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/22/2011 for the course MGMT 3121 taught by Professor Das during the Spring '11 term at CUNY Baruch.

Page1 / 4

More Practice Questions _Inv.Mgt 2011_Ans_Revised -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online