Chase has an ATM located on SU campus. The demand for cash from the ATM is a constant of $2,000 per day. It costs Chase $50 to have a private security company go to each ATM and stock it with cash. The cost of capital that Chase estimates for money is an annual rate of 15%.

a. What is the optimal amount of cash to be placed in the ATM during each trip to minimize total cost?

b. How often should the ATM be replenished?

c. What will be the average amount of cash in the ATM?

d. The ATM can hold $50,000. Chase Currently fills up the ATM’s during each trip. What’s the % increase in holding and ordering cost (as compared to that of optimal solution) as a result of this policy?

e. A smart student from the BP class suggests that Chase shut down the 2 ATM’s and have one new location that is easily accessible to all customers who use ATM’s so there’s no loss of demand. The new ATM still costs Chase $50 to fill up, and the cost of capital remains at the same rate.

f. What is the impact of the suggestion in part (e) on the holding and set-up cost?