Y our firm sells to wholesalers nationwide. Your bank has just completed a lockbox study of your cash collection system. After a thorough study of your remittance information, they categorized your customers into four groups as shown below. Your annual opportunity cost of funds is 5%.
|
|
Customer Group
|
# of Remittances |
Average Face Value |
Bank A Float |
Bank B Float |
Bank C Float |
| 1 |
2000
|
50000 |
5 |
3 |
1 |
| 2 |
4000 |
30000 |
1 |
6 |
4 |
| 3 |
1000 |
18000 |
3 |
7 |
5 |
| 4 |
200 |
20000 |
7 |
1 |
3 |
| Variable Cost |
|
|
0.30 |
0.60 |
0.80 |
| Fixed Cost |
|
|
300 |
400 |
150 |
|
Use the complete enumeration model to determine the optimal number of lockbox sites and the customer allocation among the chosen sites.