Med-Supply has fixed cost associated with buying and selling marketable securities of $40. The interest rate currently earned on the marketable securities is .013 percent per day. The firm estimated the standard deviation of its net cash flows as $80 per day. Management set a low limit on cash at $1,500.

How much is the target cash balance?

The average cash balance?

The upper level for cash?

What should the management do of the cash balance is between the upper and lower levels?

What should the management do if the cash balance exceeds the upper level or falls below the lower level?