0. Branch banks must keep enough money on hmd m satisfy customers. cash dom Suppose that the daily demand for cash at a branch of Ilniolulty Bank follows a lomo distribution with means and standard deviation aurnmarised as follows (in 51,000s):
M* Tuesday Wednesday Tura PM” 5.eadeg Mon Sag $17S $ 26 5120 518 $90 513 560 $ 9 5120518 SI2 560 521 59
armoreal truck delivers ash m this bank on= a week. The manager of the bank can order any amount °So.,. desires for this delivery. Of course, rumnng out dash in any week is very undesirable as matomers of the bank expect to be able to withdraw their degas.. demand. Of count keeping excessive cash ramw would gm. against this bappostmo. However, coh is a non-Interest earning asset, so there is an opportunity cost for holding excess cash reserves. Suppose the bank manager Mows the pracace or ordering enough cash to mart each week with a Glance of $82,000. Create a spreadsluiet model to track the daily ash bal. ma throughout the week b. What Is the probabill, Mat the bank will run out of money at some poim during the week? c. Wham°. ormoney lanced. at Me start each weekto aware .re Is at moat a Oa% chuace of numing out of move?