3) The forecasted demand, production and subcontracting capacities, and costs for the next four quarters are as follows:

Quarter 2 3 4 Demand (units) 86 135 128 59 Production capacity (units) 60 70 60 55 Subcontracting capacity (units) 40 40 40 40 Production cost ($/unit) 200 210 230 220 Subcontracting cost ($/unit) 220 280 300 280