A company manufactures vacuum cleaners. Although the company buys many of the components from outside vendors, it produces in-house HEPA filters at the rate of 600 per day. Vacuum cleaners are assembled daily at the rate of 200 per day. The company operates 300 days a year. The setup cost for a production run of the filters is $50 per setup, and the annual holding costs are $1.50 per filter (in U.S. dollars):

1. How many filters per run are optimal?

2. What is the average inventory level for this production size?

3. How many production setups would there be in a year?

4. What is the optimal length of production run in days?

5. What would be the savings in annual inventory cost if setup costs can be reduced to $30 per setup?