Euroshipping Corporation maintains separate production and distribution facilities in Sweden, France, Spain, and Italy. The corporate headquarters

Question:

Euroshipping Corporation maintains separate production and distribution facilities in Sweden, France, Spain, and Italy. The corporate headquarters is in France. As a consultant to the treasurer of Euroshipping, you have been asked to estimate how much money the firm could save by creating a centralized cash management pool. Currently, each affiliate maintains precautionary cash balances equal to 3 standard deviations above its expected demand for cash.

By how much could Euroshipping reduce its overall demand for cash if it were to create a centralized cash pool for the four affiliates? (Assume that the cash needs are normally distributed and are independent of eachother.)

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...