What are annual storage costs associated with EOQ model

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A. AIA Inc. is looking to manage its cash position using the EOQ model. The company is consuming cash at the rate of $5600 per day, and is open for business 365 days in the year. Each time the firm sells securities to obtain the cash, it costs them $270. The interest rate is 2.40%. What are the annual storage costs associated with the EOQ?

B. AIA Inc. is looking to manage its cash position using the EOQ model. The company is consuming cash at the rate of $5900 per day, and is open for business 365 days in the year. Each time the firm sells securities to obtain the cash, it costs them $230. The interest rate is 2.50%. What are the total costs (annual storage costs + annual order costs) associated with the EOQ?

Reference no: EM131948929

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