Anticipated demands for a five-month planning horizon are 740,500,280,930,600. Current starting inventory is 70 units, and the inventory manager, Thomas Lee would like to have 50 units on hand at the end of the planning horizon. Furthermore, due to previous arrangement Thomas Lee expects a receipt from an outside supplier of 100 items at the start of month 2 and 50 items at the start of month 4. Suppose that the item cost $15 each and Thomas Lee estimates a fixed cost of $200 for placing and receiving orders from an outside supplier. Assume that holding costs are based on a 12 percent annual interest rate.
(a) Find Thomas Lee's optimal production schedule.
(b) Enumerate all the exact requirements policies, compute the holding and set-up costs for each.