Electronic Hall produces Televisions and DVD Players. During the coming year quarterly demand for these products is as shown in the following table:

The proprietor wants a production schedule that meets the demand requirements in each quarter. Leadership has also decided that the inventory level for each product must be at least 150 units at the end of each Quarter. There is no inventory on hand at the start of the first quarter.

During any quarter 12000 hours of production time are available. A Television requires 2 hours and a DVD Player requires 3 hours of production time. Televisions cannot be manufactured in the fourth quarter because the company plans to modify tooling for a new product line.

Assume that each Television left in inventory at the end of a quarter incurs a holding cost of $5 and that each DVD Player left in inventory at the end of a quarter incurs a cost of $7. The proprietor wants to plan its production schedule over the year in such a way that it meets the quarterly demands and minimizes the total inventory cost.

1. Formulate and solve this production planning problem.

2. Assume the solution need not be integer.

3. Without resolving state what an extra hour of production time in Q3 is worth.