Question
During the next four months, a customer requires, respectively, 600, 800, 1200, and 900 units of a commodity, and no backlogging is allowed (that is,
During the next four months, a customer requires, respectively, 600, 800, 1200, and 900 units of a commodity, and no backlogging is allowed (that is, the customer's requirements must be met on time). Production costs are $80, $100, $105, and $90 per unit during these months. The storage cost from one month to the next is $20 per unit (assessed on ending inventory). It is estimated that each unit on hand at the end of month 4 can be sold for $60. Assume there is no beginning inventory.
a. Determine how to minimize the net cost incurred in meeting the demands for the next four months.
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