Aggregate demand for a product family is given in the table below for the 4 quarters of 2007. Production costs on regular time are $70 per unit. There are costs associated with labor fluctuation: When production levels increase from one quarter to the next hiring costs are represented as a cost of $15 per unit of increase. When production levels decrease from one quarter to the next, firing or termination costs are represented as a cost of $14 per unit of decrease.
|
Quarter
|
Demand
|
Production
|
Production Increase
|
Production decrease
|
|
Q4 06
|
|
900
|
|
|
|
Q1 07
|
1,000
|
?
|
?
|
?
|
|
Q2 07
|
700
|
?
|
?
|
?
|
|
Q3 07
|
900
|
?
|
?
|
?
|
|
Q4 07
|
1,100
|
?
|
?
|
?
|
If the aggregate plan calls for "producing to demand", equivalently "a chase strategy", determine the total cost of production for 2007.