I tried to apply theory of Economic Order Quantity on the ATM cash limit imposed by the Prime Minister.
- Q is the 2,500/- that ATM are advised to dole out.
- D: monthly consumption of cash
- K: cost to order: Even the poor & unemployed are charging 200/- to stand for 2 hours in the ATM queue. Actual cost should be higher for white-collar professionals but lets go with it.
- H: holding cost = foregone interest “4%/12”
D = 520/- monthly or 17.3 daily.
All this exercise makes me derive two conclusions:
- If you are spending 20/- daily in cash, then you are not digitized enough.
- ATM machine disperses a single 2,000/- note which is 120 days of expenditure. So should I cut it into 120 pieces and use it for the next 120 days?
I am still unable to comprehend why I am facing so much problem in obtaining a single pink slip of paper while politicians have stacks already assembled in their homes?