Holstein Computing manufactures an inexpensive audio card (Audio Max) for assembly into several models of its microcomputers. The annual demand for this card is 100,000 units. The inventory carrying cost is $0.02 per unit per day 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. The company ships its products on a daily basis.
1. What is the maximum inventory and average inventory for Audio Max?
2. What is the annual setup cost and holding cost for Audio Max?