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Operations Management
Smith Inc. is a retail mail order firm that currently uses a centralized collection system that requires all checks to be sent to its flotation headquarters. An average of 6 days is required for mailed checks to be received, 3 days for Smith Inc. to process them, and 2 days for the checks to clear through its bank. A proposed lockbox system would decrease the mailing and processing time to 2 days and the check clearing time for 1 day. Smith Inc. has an average daily collection of P250,000. If Smith Inc. adopts this proposed lockbox system, its average cash balance will increase by. A. 1.2M B. 450k C. 750k D. 2M

Smith Inc. is a retail mail order firm that currently uses a centralized collection system that requires all checks to be sent to its flotation headquarters. An average of 6 days is required for mailed checks to be received, 3 days for Smith Inc. to process them, and 2 days for the checks to clear through its bank. A proposed lockbox system would decrease the mailing and processing time to 2 days and the check clearing time for 1 day. Smith Inc. has an average daily collection of P250,000. If Smith Inc. adopts this proposed lockbox system, its average cash balance will increase by. A. 1.2M B. 450k C. 750k D. 2M

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Smith Inc. is a retail mail order firm that currently uses a centralized collection system that requires all checks to be sent to its flotation headquarters. An average of 6 days is required for mailed checks to be received, 3 days for Smith Inc. to process them, and 2 days for the checks to clear through its bank. A proposed lockbox system would decrease the mailing and processing time to 2 days and the check clearing time for 1 day. Smith Inc. has an average daily collection of P250,000. If Smith Inc. adopts this proposed lockbox system, its average cash balance will increase by.

A. 1.2M

B. 450k

C. 750k

D. 2M

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