Customers of a retail chain makes credit card payments from four regions of the country (East, Midwest, South, and West). The average daily payments from each area are $115,000, $125,000, $140,000, and $130,000 respectively. This companys management must decide where customers should mail their payments. The company is considering setting up payment centers in four cities: Philadelphia, San Francisco, St. Louis, and Tampa. The average number of days that elapse between the time a payment check is mailed and the time the check is credited to one of the companys accounts is also given in the days in transit table below. The annual cost of operating a payment center is $100,000. Moreover, each payment center that is opened could handle at most $270,000 per day in payments. All of the customers in each region must send all of their payments to a single payment center. This company wants to determine the payment center configuration that minimizes the sum of annual lost interest and center operating costs. Assume that an annual interest rate of 18% can be earned on cash received.

Days in Transit
	Lockbox location
Check origin	Philadelphia	San Francisco	St. Louis	Tampa
East	3	3	4	5
Midwest	4	3	3	4
South	5	4	3	3
West	4	4	4	3

1. If each payment center that is opened could handle at most $600,000 per day in payments, how many lockbox/ payment center would be established.

Select one:

2.

If each payment center that is opened could handle at most $600,000 per day in payments, please choose the correct answer.

Select one:

a. The lockbox/ payment center would be established in Tampa.

b. The lockbox/ payment center would be established in San Francisco

c. The lockbox/ payment center would be established in St.Louis.

d. The lockbox/ payment center would be established in Philadelphi

3. If the annual interest rate was reduced from 18% to 10%, what would be the total amount of lockbox/ payment center cost paid by the retail chain?