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The yearly demand for a furniture manufacturer specializing in handcrafted chairs is 8000 units. The company can manufacture 200 units each day. Starting a new batch of production incurs a cost of $120 for organizing raw materials, resetting workstations, and cleaning the tools. The cost to store a chair for one year is $50. The company's strategy has been to manufacture 400 chairs per production cycle. Assuming there are 250 operational days in a year:
1. Calculate the daily sales rate for the chairs.
2. If the firm continues to produce in batches of 400, how many days will each production cycle last?
3. How many batches will need to be produced each year and what will be the associated total cost?
4. At the end of a production cycle, what is the number of chairs in stock and what is the average stock level?
5. What is the total annual cost for setup and storage if the batch size remains at 400 chairs?
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