Chapter 13 - Inventory Management Problems Problem 1: The Red Angels is both a producer and a user of steel valves. The company operates 220 days a year and uses the valves at a rate of 50 per day. Valves can be produced at a rate of 200 per day. Annual storage cost is $2 per valves and machine setup cost is $70 per production run. a. Determine the economic production run quantity. b. Estimate approximate number of runs per year. c. Compute the maximum inventory level. d. What is the average inventory on hand? Problem 2: A construction company uses roughly 3,400 tonnes of cement a year. Currently the firm purchases 300 tonnes per order and pays $3 per tonne. The supplier has just announced that orders of 1,000 tonnes or more will be filled at a price of $2 per tonne. The construction firm incurs a cost of $100 each time it submits an order and assigns an annual holding cost of 17 percent of the purchase price per pound. a. Determine the order size that will minimize the total cost. b. If the supplier offered the discount at 1,500 tonnes instead of 1,000 tonnes, what order size would minimize total cost