ABC company manufactures three types of items at a work center on two machines. Since the setup times are relatively high compared with the processing times, ABC has been advised to implement the signal Kanban operating policy. The following data are available:

Holding cost = 25 % of the container cost, per year

Setup Cost = 65 USD per hour.

Item	Container Cost ($)	Daily Demand (Containers)	Processing time per container (hours)	Setup Time (hours)
1	500	300	0,1	0,2
2	1.000	100	0,15	0,4
3	1.500	200	0,25	0,5

Determine the optimal number of signal kanbans for the following situations:

Minimum inventory level

Minimum total cost consisting of setup and holding

The company is also planning to make some investments in reducing setup times. Before making these investments, they would like to know what level of reduction in inventory and total cost will be if there are 10 and 30 % decreases in setup times.