Question 6 (10 points) Holstein Computing manufactures an inexpensive audio card (Audio Max) for assembly into several models of its microcomputers. The annual demand for this part is 100,000 units. The annual inventory carrying cost is $5 per unit and the cost of preparing an order and making production setup for the order is $750. The company operates 250 days per year. The machine used to manufacture this part has a production rate of 2000 units per day. (10 points) a. Calculate the optimum lot order size. b. How many lots are produced in a year? c. What is the average inventory for Audio Max? d. What is the annual cost of preparing the orders and making the setups for Audio Max? Hide hint for Question 6 Question 5 (10 points) A product has a reorder point of 260 units, and is ordered ten times a year. The following table shows the historical distribution of demand values observed during the reorder period. Demand 240 250 260 270 280 Probability 1 2 4 2 .1 Currently, stockouts are valued at $5 per unit per occurrence, while inventory carrying costs are 52 per unit per year. Should the firm add safety stock? If so, how much safety stock should be added? Question 4 (10 points) 1. Your company has compiled the following data on the small set of products that comprise the specialty repair parts division. Which inventory policies do you suggest the firm should implement for each product? Explain. SKU R11 S22 T33 U44 VSS Annual Demand 250 75 20 150 100 Unit Cost $250 $90 $60 $150 $75