The demand is captive i$.$e$.$ whenever a month's demand is not met, the unsatisfied demand is required to be met from the production of the subsequent month. For every unit that cannot be shipped because of insufficient inventory, NMC bears an additional cost of Rs $20$ on each item.

A decision to change the production level for the following month should be made by the end of the month. The cost of changing the production level depends on the direction $($increase or decrease$)$ and the magnitude is given at the end. For example, if the production in May is $2000$ units and if a decision is taken to increase the production by $200$ is taken at the end of May, the production changeover cost is Rs $2400.$ If$,$ on the other hand, no change in production is desired, then the production remains at $2000$ for June. Maximum allowable production in a month is $3500.$ The production in December Year $4$ is $1000$ units. If production in January Year $5$ is different, there is an increased cost.

The company decides to maintain a production of $2000$ units in January Year $5.$ The cost incurred in December Year $5$ will also include the cost of changing production from December Year $4$ to January Year $5$

There will be shutdowns in March and September. If production level is different in April is different from that in February, then the company incurs workforce changeover cost. Similarly, there is change only between August and October production levels.

The cost of handling equipment in inventory is Re $1$ per month. Opening inventory in January Year $5$ is $1500$ units and expected inventory in December Year $5$ is $2500$ units. This is due to a Government regulation that stipulates a stock of one month demand at the end of each calendar year. The auditors charge a penalty of Rs $20$ per unit for every unit short of $2500$ at the end of the year. Because of this NMC paid a heavy penalty last year.