Example 5 5 7 3 Period Setup Cost $ Holding Cost $/unit.period 0.4 Capacity Shortage Cost $/unit.period 3.0 6.0 Production Cost $/unit 2.0 5.0 1 45 6 2 25 6 0.6 0.4 3 35 3.0 5.0 6 4 25 1.0 0.3 4.0 6 5 2.0 6.0 Assume that holding cost is applied at the inventory at the beginning of the period. Holding cost at the beginning of period 5 is considered as disposal cost $/unit. Assume that shortage cost is applied at the inventory at the beginning of the period. Shortage cost at the beginning of period 5 is considered as lost sales $/unit. Example 5 5 7 3 Period Setup Cost $ Holding Cost $/unit.period 0.4 Capacity Shortage Cost $/unit.period 3.0 6.0 Production Cost $/unit 2.0 5.0 1 45 6 2 25 6 0.6 0.4 3 35 3.0 5.0 6 4 25 1.0 0.3 4.0 6 5 2.0 6.0 Assume that holding cost is applied at the inventory at the beginning of the period. Holding cost at the beginning of period 5 is considered as disposal cost $/unit. Assume that shortage cost is applied at the inventory at the beginning of the period. Shortage cost at the beginning of period 5 is considered as lost sales $/unit