Question: Demand for Quiggly Pops follows an up and down pattern over the four quarters of a year, with peaks in the spring and winter months

Demand for Quiggly Pops follows an up and down pattern over the four quarters of a year, with peaks in the spring and winter months when special promotions are held. Production is handled by a highly skilled local workforce during a regular 40-hour week (i.e., overtime and subcontracting are not used). The company likes to zero out its inventory at the end of a year so that it can start fresh each January. QP currently uses a level production strategy but would like to evaluate other options. The cost and demand figures are given below. Beginning workforce =40 workers; Production per employee =1,250 units per quarter; Hiring cost = $500 per worker; Firing cost = $500 per worker; Inventory carrying cost = $1 per unit per quarter; Regular production cost = $10 per unit; Demand Qtr 1=70,000; Demand Qtr 2=100,000; Demand Qtr 3=50,000; Demand Qtr 4=150,000. What is the cost of a level production strategy?

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