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. Thus, 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:

a. Use the sequential, unmodified, SilverMeal approach to determine the patterns of replenishments. To be specific, first use the SilverMeal at the finishing stage with A = $30 and v = $20/box to get the pattern of replenishments at the finishing stage. These replenishments become the requirements pattern for the primary stage. Use these, with A = $24 and v = $15/box, to find the replenishments at the primary stage. Finally, cost out the overall solution.

b. Use the BlackburnMillen approach to establish the replenishments. In particular, Equations are used to establish AR and vR for the SilverMeal heuristic at the finishing stage. Again, cost out the overall solution and compare with part a.

\begin{tabular}{|l|c|c|c|c|c|c|c|c|} \hline Month & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 \\ \hline Requirements in boxes (for finished product) & 10 & 62 & 12 & 130 & 154 & 129 & 88 & 52 \\ \hline \end{tabular}