Reference no: EM13993415

Steelcase has received orders of 2400, 2200, 2700, and 2500 units of a special-purpose panel for each of the next four months. SC can meet these demands by producing the panel, by drawing from its inventory, or by using any combination of the two alternatives. The production costs during each of the next four months are projected to be $74, $75, $76, and $76.5 per unit. Because costs are rising each month, SC might be better off producing more panel than it needs in a given month and storing the excess. Production capacity, though, cannot exceed 4000 units in any one month. The monthly production is finished at the end of the month at which time the demand is met. Any remaining panel is then stored in inventory at a cost of $1.2 per panel for each month that it remains there. If production level is increased from one month to the next, then the company incurs a cost of $0.5 per unit of increased production to cover the additional labor and/or overtime. Each unit of decreased production incurs a cost of $0.3 to cover the benefits of unused employees. The production level during the previous month was 1800 units, and the beginning inventory is 1000 units. Inventory at the end of the fourth month must be at least 1500 units to cover anticipated demand. Formulate a production plan for SC that minimizes the total costs over the next four months. Please give a detailed answer.