Park Sung Inc. is a fictional South Korean manufacturer of refrigerators. The company produces at its manufacturing plant in Busan subcomponents for its refrigerators at the rate 275 units per day. The annual usage rate of this subcomponents is 30,000 units. The holding cost is US$3 per unit per year, and the setup cost of producing these subcomponents is US$50 per setup. The company operates its manufacturing facility for 300 days during a year:

1. What is the economic production quantity (EPQ)?

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

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 US$40 per setup?