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1) Float and weighted average delay: your neighbor goes to the post office once a month and picks up two checks, one for $17,000 and one for $6,000.The larger check takes four days to clear after it is deposited; the smaller one takes five days.
a) What is the total float for the month
b) What is the average daily float
c) What are the average daily receipts and weighted average delay?

2) Lockboxes and collection: It takes cookie cutter modular homes, Inc., about six days to receive and deposit checks from customer's .Cookie cutters management is considering a lockbox system to reduce the firm's collection times. It is expected that the lockbox system will reduce receipt and deposit times to three days total. Average daily collections are $145,000 and the required return is 9 percent per year.
a) What is the reduction in outstanding cash balance as a result of implementing the lockbox system?
b) What is the dollar return that could be earned on these savings?
c) What is the maximum monthly charge cookie cutter should pay for this lockbox system if the payment is due at the end of the month? What if the payment is due at the beginning of the month?

3) Size of account receivable: The Arizona bay corporation sells on credit terms of net 30. Its accounts are, on average,8 days past due. If annual credit sales are $8.4 million, what is the company's balance sheet amount in account receivable?

4) EOQ: The trektronics store begins each week with 300 phasers in stock. This stock is depleted each week and reordered. If the carrying cost per phaser is $41 per year and the fixed order cost is $95, what is the total carrying cost? What is the restocking cost? Should trektronics increase or decrease its order size? Describe an optimal inventory policy for trektronics in terms of order size and order frequency.

 

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