Wachovia operates a network of automated teller machines (ATMs). On average a customer withdrawals $80 of cash each time. The bank estimates that the fixed cost of filling an ATM with cash is about $100 regardless of the amount of cash put in. Each month on average 600 customers use the ATM to withdrawal cash. How much cash should the bank keep at an ATM if its annual cost of money is 10%? How often should the bank replenish an ATM?© BrainMass Inc. brainmass.com October 10, 2019, 12:57 am ad1c9bdddf
Please see attached file for answers.
This problem is similar to an economic order quantity problem. The EOQ formula is presented below:
The solution determines how often should the bank replenish the ATM.