Consider the example that was used throughout Chapter 5. Suppose that the production process actually involves two stages (call them primary and finishing, or warehouse and retailer). The relevant cost parameters are AW = $24, AR = $30, vW = $15/box, vR = $20/box, and r = 0.02 $/$/month. Note that AW + AR = $54, the A value that was used, with v = $20/unit, in Chapter 5. Thus, implicitly in Chapter 5, we assumed that any replenishment at the primary stage was immediately processed through the finishing stage (with no primary inventory being retained). For simplicity, we use only the first 8 months of the requirements pattern, repeated as follows: