Determine eoq for bank cash

Reference no: EM1355058

A bank branch must keep a stock of cash on hand for customer withdrawals. The net daily withdrawal rate at the branch is $5,000. The opportunity cost of cash is 10% per year. Repleneshment of the cash stock from the central bank requires careful accounting and contracting to an armored delivery service. This costs $250 per repleneshment and requires 2 days of notice to the carrier. Determine the optimal policy for obtaining cash, that is how much and at what point?

Reference no: EM1355058

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