EoQ & Cash withdrawal limit

I tried to apply theory of Economic Order Quantity on the ATM cash limit imposed by the Prime Minister.

  1. Q is the 2,500/- that ATM are advised to dole out.
  2. D: monthly consumption of cash
  3. 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.
  4. H: holding cost = foregone interest “4%/12”

2,500=√((2*D*200)/(4/12))

2500=√(1200*D)

D = 520/- monthly or 17.3 daily.

All this exercise makes me derive two conclusions:

  1. If you are spending 20/- daily in cash, then you are not digitized enough.
  2. 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?

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One thought on “EoQ & Cash withdrawal limit

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