Deacon Production Company faces the following demands during the next three weeks: week 1, 20 units; week 2, 10 units; week 3, 15 units. The unit production costs during each week are as follows: week 1, $13; week 2, $14; week 3, $15. A holding cost of $2/unit is assessed against each week’s ending inventory. At the beginning of week 1, the company has 5 units on hand. In reality, not all goods produced during a month can be used to meet the current month’s demand. To model this fact, we assume that only half of the goods produced during a week can be used to meet the current week’s demand (assume that all of the prior week’s ending inventory can be used to meet the current week’s demand). Determine how to minimize the cost of meeting the demand for the next three weeks.
