Accounts Receivable (AR) receives an average of 1,000 payments per week. There is an average of 500 checks waiting to be deposited.
(a) What is the average time spent by each check waiting to be deposited?
(b) Assume that the checks coming in are either small or large. Small checks are for an average of $500 and large checks are for an average of $5,000. 20% of the checks coming in are large with the rest being small. Currently no distinction is made between the large and small checks. As a result 20% of the checks waiting to be processed are large. Is it worth reallocating resources so that large checks wait an average of 0.3 weeks while small checks wait an average of 0.8 week before being processed?

Question

Quizplus · Accepted Answer

The Answer of Accounts Receivable (AR) receives an average of 1,000 payments per week. There is an average of 500 checks waiting to be deposited.
(a) What is the average time spent by each check waiting to be deposited?
(b) Assume that the checks coming in are either small or large. Small checks are for an average of $500 and large checks are for an average of $5,000. 20% of the checks coming in are large with the rest being small. Currently no distinction is made between the large and small checks. As a result 20% of the checks waiting to be processed are large. Is it worth reallocating resources so that large checks wait an average of 0.3 weeks while small checks wait an average of 0.8 week before being processed?

Accounts Receivable (AR) Receives an Average of 1,000 Payments Per