Question

Speaker’s Clearinghouse must disburse sweepstakes checks to winners in four different regions of the country: Southeast (SE), Northeast (NE), Far West (FW), and Midwest (MW). The average daily amount of the checks written to winners in each region of the country is as follows: SE, $40,000; NE, $60,000; FW, $30,000; MW, $50,000. Speaker’s must issue the checks the day they find out a customer has won. They can delay winners from quickly cashing their checks by giving a winner a check drawn on an out-of-the-way bank (this will cause the check to clear slowly). Four bank sites are under consideration: Frosbite Falls, Montana (FF), Redville, South Carolina (R), Painted Forest, Arizona (PF), and Beanville, Maine (B). The annual cost of maintaining an account at each bank is as follows: FF, $50,000; R, $40,000; PF, $30,000; B, $20,000. Each bank has a requirement that the average daily amount of checks written cannot exceed $90,000. The average number of days it takes a check to clear is given in Table 22. Assuming that money invested by Speaker’s earns 15% per year, where should the company have bank accounts, and from which bank should a given customer’s check be written?

TABLE 22 Region FF PF SE NE FW 48211 MW 5 4 75

Answer 1