The Miller–Orr Model. Heavenly Company has experienced a stochastic demand for its product, which results in fluctuating cash balances randomly. The following information is supplied: Fixed cost of a...

The Miller–Orr Model. Heavenly Company has experienced a stochastic demand for its product, which results in fluctuating cash balances randomly. The following information is supplied:

Fixed cost of a securities transaction $100

Variance of daily net cash flows $1,000

Daily interest rate on securities (6%/360) 0.000167

Determine the optimal cash balance, upper and lower limit of cash needed, and average cash balance.