Question: 2 . Our company just won a contract to supply the government with transport vehicles. We have weekly demand to meet over the 3 months

2. Our company just won a contract to supply the government with transport vehicles. We have weekly demand to meet over the 3 months of the contract, given in the table below. We currently do not have the factory or warehouse set up. First we must choose how much capacity to invest in. Factory costs scale linearly, and it costs us $20,000 for each unit of weekly capacity we choose to build (e.g. we can pay $20,000,000 to be able to make 1,000 units per week at normal costs, or we can by $10,000,000 to have capacity of 500 units per week). Each unit at normal cost costs $2000 to build. We have the capacity to make overtime units at $3000 per unit, up to an extra 50% of the capacity (if our capacity is 1000 units, we can make up to 500 OT units each week). We also can store units from month to month. It costs us $400 per month to store each unit.
a) How much capacity should we build, and how much should we produce each week in order to minimize our total costs? What will our total cost be?

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