The Operations Manager for Shadyside Savings & Loan Orders Cash

question 15

Multiple Choice

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, if she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level?

• A)$3,000
• B)$6,000
• C)$12,500
• D)$300,000
• E)$600,000

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Definitions:

Preset Price

refers to a price that is established in advance and does not change in response to market conditions or negotiation.

Price Ceiling

A legal maximum price set by the government on certain goods and services to prevent prices from becoming too high.

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service, typically set above the equilibrium price to aid producers.

Subsidizing Federal

Financial support from the federal government to help reduce the cost of goods and services or to encourage investment in specific sectors.