**Problem 1**

The Trektronics store begins each week with 460 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $41 per year and the fixed order cost is $84. What is the current total carrying cost? (Do not round intermediate calculations.)

- The carrying costs are the average inventory times the cost of carrying an individual unit.
- What is the current restocking cost? (Do not round intermediate calculations.)
- What is the economic order quantity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
- How many orders per year will Tektronics place if it orders the economic order quantity?

**Problem 2**

Your neighbor goes to the post office once a month and picks up two checks, one for $13,500 and one for $4,500. The larger check takes four days to clear after it is deposited; the smaller one takes three days. Assume 30 days in a month.

- What is the total float for the month?
- What is the average daily float?
- What are the average daily receipts? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
- What is the weighted average delay?

**Problem 3**

The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, 4 days past due. Annual credit sales are $5.8 million. What is the company’s balance sheet amount in accounts receivable?

**Problem 4**

It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s 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 four days total. Average daily collections are $131,000, and the required rate of return is 6 percent per year. Assume 365 days per year.

- What is the reduction in outstanding cash balances as a result of implementing the lockbox system? (Do not round intermediate calculations.)
- What is the daily dollar return that could be earned on these savings? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
- 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? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
- What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the beginning of the month? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

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