Question $4.(20$marks$)$

Hint:

EOQ $=$

h

o

C

$2$C $$ D

Where, Co $=$ Ordering cost; and Ch $=$ Annual holding cost per item; and D $=$ Annual demand$)$

$($a$)$ National Bank operates a network of automated teller machines. Cash withdrawals at

an ATM averages about N$500.$ The bank estimates that the fixed cost of filling an

ATM with cash is about N$1000$ regardless of the amount of cash put in$.$ Average

numbers of cash withdrawals per week is about $150.$ How much cash should the bank

keep at an ATM if its annual cost of money is $12\%.$ How often should the bank

replenish an ATM?