Provenza Manufactures 3,400 switch assemblies per week and reorders another 3,400. If the relevant carrying cost per switch assembly is $7,45, and the fixed cost is $1,100, is the companys inventory policy optimal? Why or why not?

Sanchez, Inc., is considering a change in its cash only policy. The new terns of trade would be net one month. Based on the following information, determine if the company should proceed or not. Describe the build-up of receivables in this case. The required return is 0.95 percent per month.

Current Policy New Policy

Price per unit $540 $540

Cost per unit $395 $395

Unit sales per month 1,080 1,130