# Production costs are 5 8 4 and 7 per unit during

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Production costs are \$5, \$8, \$4, and \$7 per unit during these months. The storage cost from one month to the next is \$2 per unit (assessed on ending inventory). It is estimated that each unit on hand at the end of month 4 can be sold for \$6. a. Determine how to minimize the net cost incurred in meeting the demands for the next 4 months. b. Starting with the optimal solution, use SolverTable to see what happens to the decision variables and the total cost when the initial inventory varies from 0 (the implied value in the problem) to 100 in 10-unit increments. How much lower would the total cost be if the company started with 10 units in inventory, rather than none? Would this same cost decrease occur for every 10-unit increase in initial inventory?"

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Problem 2.5 Meeting demand with no backlogging Month 1 2 3 4 Demand 50 65 100 70 Unit production cost \$5 \$8 \$4 \$7 Unit holding cost \$2 \$2 \$2 (\$6) Initial inventory 0 Production schedule Produced

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