Question

1.A bank branch must keep stock of cash on hand for customer withdrawals. The net daily withdrawal rate at the branch is $10,000. The borrowing rate for the cash was 8% per year. Replenishment of the cash stock form the central bank requires careful accounting and contracting to an armored delivery service. This costs $400 per replenishment and requires two days of notice to the carrier. Determine the optimal policy for obtaining cash from the central bank. Find the order quantity and the reorder level.

Answer 1

optimal policy for obtaining cash from the central bank is 10000

Step-by-step explanation:

given data

total cash needed = $10000

fixed cos = $400

interest rate = 8% = 0.08

solution

we will ger here cash balance from the central bank that is express as

C =
`\sqrt{(2* 400* 10000)/(0.08)}`

C = 10000

so optimal policy for obtaining cash from the central bank is 10000