Determine the total cost of production

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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.

 

 

Reference no: EM13109271

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