eoq inventory data | Business & Finance homework help
To calculate value of lockbox system on monthly basis, we need to know two things : average amount received per day and opportunity cost . In this case , Faust receives an average of $2,520,000 in payments per day and their opportunity cost is 10 percent . This means that if they do not have access to any other form of payment processing services then they would be losing out on approximately $252,000 every month due delayed collections.
Now that we know both these figures it becomes easier us estimate total savings generated by using lockbox system. Since $252,000 represents opportunity cost incurred without utilizing such services , subtracting it from current expenses will give us more accurate picture regarding what savings are being achieved each month due implementation of this solution .
In conclusion , evaluating worth of lockbox systems based on context specific parameters helps companies determine whether or not its appropriate for them given particular situation thus allowing them make informed decisions when selecting financial service providers while minimizing disruption in terms of cash flows.