1. (A Forward Buying Problem) A major pharmaceutical wholesaler buys brand drugs from a manufacturer at wholesale prices and sells them to pharmacies at retail prices. It estimates that the wholesale (W) price, the retail (R) price and pharmacy sales for a blockbuster drug follow this trend:

	Month 1	2	3	4	5	6
W price ($/unit)	40	45	55	60	65	70
R price ($/unit)	80	90	110	120	130	140
Demand (in units)	20 million	30 million	45 million	60 million	75 million	95 million

The inventory carrying cost for one unit for one month is $2. Assume enough storage capacity and zero initial inventory, how should the wholesaler take advantage of the price and demand fluctuation to maximize its profit?

All decision variables:

x₁ = the number of brand drugs wholesaler buys from a manufacturer at wholesale prices in month 1

x₆ = the number of brand drugs wholesaler buys from a manufacturer at wholesale prices in month 6

y₁ = the number of brand drugs held in inventory from month 1 to month 2

y₆ = the number of brand drugs held in inventory from month 6 to month 7

Answer the following questions:

Which of the following is the objective function?

Which of the following is a constraint?