I don't get this part, even with the explanation you wrote below. In my view, inventory costs in the objective function should be: I1+I2....+I7
Because you have 2*Ii/2 for all i
E.g. Inventory Cost in Period 2 will be:
2*I2/2 = I2 (you get rid of the 2s and left with simply I)
Similarly, if it was given that inventory cost per unit is 5 dollars instead of 2, then I would write it as: 5*I2/2 = 2.5I2 (in the objective function) and then do the same for all i. If I am wrong then what do I get wrong, can you help? Thanks in advance.