ABC Company presently follows a decentralized system of cash management where it and its affiliates each maintain their own transaction and precautionary cash balances. The company believes that it and its affiliates cash needs are normally distributed and independent from one another. It is corporate policy to maintain three standard deviations of cash as precautionary holdings.

a) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under its current decentralized system following its corporate policy to maintain three standard deviations of cash as precautionary holdings.

b) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under a centralized cash management system following the company's corporate policy to maintain three standard deviations of cash as precautionary holdings.

Affiliate U.S. Canada Mexico Chile Expected Transactions 100000 150000 175000 200000 Standard Deviation 33000 60000 30000 70000