The Manager of the Quick Stop Corner Convenience Store (Which

question 60

Multiple Choice

The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs) . Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?

• A)4 cases
• B)12 cases
• C)8 cases
• D)20 cases
• E)16 cases

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Definitions:

Original Maturity

The initial fixed period for which a financial instrument, such as a bond or loan, is issued before it is due for repayment.

Required Reserves

The least amount of money that a bank is required to keep on hand as a safeguard for deposits, in compliance with the rules set by central bank authorities.

Demand Deposits

Bank account funds that are available on demand without any delay or penalties, like those in checking accounts.

Excess Reserves

The reserves held by a bank in excess of the minimum reserve requirements set by central banking authorities.