The smallest total monthly cost , Basic Statistics

Each month, the firm Cashco has 50% chance that an amount of $ 1,000 will be credited In its current account, and a 50% chance that the account is debited $ 1,000. As current account does not pay interest, Cashco considers that for each $ 1,000 in balance current account at the end of the month, there is a cost of $ 15 (in lost interest). In the beginning of each month, Cashco can adjust the balance of the current account by making a deposit or withdrawal (for an arbitrary amount), with a cost of $ 20 per transaction. Cashco should never leave the balance becomes negative. The company is currently reviewing both following policies for the management of its liquidity:

P1: the beginning of a month when the balance is $ 3,000, immediately lower the balance to $ 1,000. At the beginning of a month when the balance is $ 0, immediately pay back $ 1000.

P2: the beginning of a month when the balance is $ 3,000, immediately lowering the balance to $ 2,000. At the beginning of a month when the balance is $ 0, immediately back the balance to $ 2,000.

Which of the two policies P1 and P2 have the smallest total monthly cost (opportunity more transactions), on average? NB The sequence of events takes place every month as shown below:

1. Observe the balance

2. Adjust the balance (if desired)

3. The balance changes randomly

4. The opportunity cost is charged.

Posted Date: 3/26/2013 8:07:34 AM | Location : United States







Related Discussions:- The smallest total monthly cost , Assignment Help, Ask Question on The smallest total monthly cost , Get Answer, Expert's Help, The smallest total monthly cost Discussions

Write discussion on The smallest total monthly cost
Your posts are moderated
Related Questions
Depreciation during the financial year  The Resources which are bought during the economical season and its determined that the Depreciation will be incurred on them @ 10% PA it

The Rohr Company''s old equipment for making subassemblies is worn out. The company is considering two alternatives: a) Completely replacing the old equipment with new equipment

AA major razor blade manufacturer advertises that its twin-blade disposable razor “gets you lots more shaves” than any single-blade disposable razor on the market. A rival company

Automated clearing house (ach) A across the country settlement and selection program that provides for automated submission and arrangement of resources. Although the phrase Elec

What is meant by the full cost of a product? Many organizations use the expression top dollars to mean the complete creating or technology cost of a product. To this organiz

A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i

Definition of capitalization is termed or shown as a process of recording & classifying the expenditure on assets in a balance sheet. Can you explain me this term more.

Nuclear force Is a short range force extending upto 10 fm. It is fifty-sixty times stronger than electromagnetic force. Nuclear force is independent of charge. Nuclear force betw

office supplies on hand at year-end amounted to $100

How do I calculate 50p3?