QUESTION 23

Use the following information to answer Questions 23 - 27.

Your firm sells to wholesalers nationwide. Your bank has just completed a lockbox study of your cash collection system. After a thorough study of your remittance information, they categorized your customers into three groups as shown below. Your annual opportunity cost of funds is 5%.

Customer Group	# of Remittances	Average Face Value	Bank A Float	Bank B Float	Bank C Float
1	1,000	$150,000	4	2	2
2	2,000	$300,000	2	5	6
3	3,000	$28,000	4	6	3
Variable Cost			$0.20	$0.50	$0.70
Fixed Cost			$300	$400	$150

Use the complete enumeration model to determine the optimal number of lockbox sites and the customer allocation among the chosen sites.

Which of the following one-bank lockbox systems has the lowest total cost?

	a.	Bank B
	b.	Bank A
	c.	Bank C

3 points

QUESTION 24

Which of the following two-bank lockbox systems has the lowest total cost?

	a.	Bank A Bank C
	b.	Bank A Bank B
	c.	Bank B Bank C

3 points

QUESTION 25

What is the total cost for the three-bank lockbox system?

	a.	$253,706.85
	b.	$243,650
	c.	$294,102.74
	d.	$243,850

3 points

QUESTION 26

What is the optimal combination of lockbox system?

	a.	Bank A Bank C
	b.	Bank A
	c.	Bank A Bank B Bank C
	d.	Bank A Bank B

3 points

QUESTION 27

What is the customer allocation for the optimal lockbox system?

	a.	Customer Groups 1 and 3 are assigned to Bank A and Customer Group 2 is assigned to Bank C.
	b.	Customer Group 1 is assigned to Bank A, Customer Group 2 is assigned to Bank C, and Customer Group 3 is assigned to Bank B.
	c.	Customer Groups 1 and 3 are assigned to Bank C and Customer Group 2 is assigned to Bank A.
	d.	Customer Group 1 is assigned to Bank B, Customer Group 2 is assigned to Bank A, and Customer Group 3 is assigned to Bank C.