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Y our firm sells to wholesalers nationwide. Your bank has just completed a lockbox study of your cash collection system. After a thorough study of

Y our 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 four 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

2000

50000 5 3 1
2 4000 30000 1 6 4
3 1000 18000 3 7 5
4 200 20000 7 1 3
Variable Cost 0.30 0.60 0.80
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.

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