Part I - EOQ Daimler is studying the batch sizes used in the sheet metal stamping operation on the production line for its E350 series vehicles. Production of the E350 requires 1,000 of each type of stamping per month. Different types of stampings include front quarter- panel, roof, hood, door, etc. The stamping presses require approximately thirty minutes to change the die in order to begin stamping a new part. Production engineers have determined that the opportunity cost of one hour of lost stamping capacity is $20,000. The total holding costs per individual stamping are estimated at $100 per year. (a) How large of a production batch should Daimler use for each type of stamping? (b) To reduce inventories, Daimler management is pushing for production batch sizes of 250 stampings (which represents one week of vehicle production). How short would die setup times have to be for this to be the optimal batch size? Part II - Newsvendor Flexible Spending Accounts (FSAs) allow Americans to set aside a predetermined amount of money each year to pay for eligible health care expenses from their pre-tax income. The amount set aside must be determined before the start of the year, and unused balance in the FSA at the end of the year is lost. any (a) If an individual faces a 30% marginal tax rate and estimates their FSA-eligible expenses to be normally distributed with a mean of $2000 and a standard deviation of $1000, how much should they set aside in their FSA? (b) If this individual's marginal tax rate increases to 35%, how much should they set aside?