ADMS 3530 Chapter Notes - Chapter 22: Transaction Cost, Profit Margin, Interest Rate Risk

• School: York University
• Department: Administrative Studies
• Course: ADMS 3530
• Professor: Alagurajah

Document Summary

Adms 3530 ch 20 21 22 part 2: managing inventories of cash, cash management similar to optimal order size problem. Instead of bricks per order value of short term securities sold when cash balance replenished: # of bricks sold total cash outflow, cost per order cost per sale of securities, carrying cost interest rate. Initial cash balance formula p. 670 (cid:862)bau(cid:373)ol"s (cid:373)odel of opti(cid:373)al (cid:272)ash (cid:271)ala(cid:374)(cid:272)e(cid:863) I interest rate per period on marketable securities. Illustration p. 672 review this (this equation calculates monthly ncf: calculates cash balance stable at lower limit but always, cash management in practice now & then fluctuations managers cannot plan for. Impact of rfid most currencies would have metal/metallic ribbons ide(cid:374)tif(cid:455) (cid:271)ill"s serial (cid:374)u(cid:373)(cid:271)er: use rfid gates track how much cash transacted / stolen & illegal bills identified. Investments have different degrees of liquidity if not highly liquid, offer higher yield.