Solve C and D and show steps all steps.

Suppose that Ivar Jorgenson, a head operations planner for Bi-Product Company, finds out that the long-range forecast was revised by the growing economy. As a result, the marketing department at Bi-Product Company raises its forecast for quarter 2, 3 and 4 sales of Product B to 7000, 6500 and 7000 units respectively. He will now have to develop and analyze several alternative level plans for next year. Keep in mind that each of these plans must consider:

- Beginning inventory of 1,000 units of Product A and 500 units of Product B.

- Ending inventory and back orders for quarter 4 must be zero

- Each plan must have the same level total-output rate each quarter.

- Demand forecast for product A in Q1,2,3,4 is 5000, 6500, 6200, and 6800

- Demand Forecast for product B in Q1 is 6500

Production and costs

Regular time $20.00 per unit

Overtime $25.00 per unit

Subcontract $35.00 per unit

Part-time $30.00 per unit

Inventory $1.00 per unit per quarter (based on average Inventory during each quarter)

Back order $50.00 per unit per quarter (based on back orders atend of quarter)

Hiring $200.00 per full-time employee (no cost if part-time)

Layoff $2,000.00 per full-time employee (no cost if part-time)

Production rates

Regular 100 units per full-time employee per quarter (of either unit)

Overtime (max.) 10 units per full-time employee per quarter (of either unit)

Part-time 20 units per part-time employee per quarter (of either unit)

Initial workforce size 116 full-time employees (beginning of quarter1)

Additional assumptions

1.Part-time employee may not work overtime.

2.Assume 100% utilization of employees on regular time (i.e., all employees on the payroll during a period produce at least 100 units). If overtime is used, up to another 10 units can be produced per employee.

a.Develop a level plan that uses overtime by regular, full-time employees to meet the new demand conditions (with no additional hiring). Calculate the total annual cost of this plan.

b.Develop a second plan that will use regular employees (no overtime) plus subcontracting to meet the new demand conditions (with no additional hiring). Calculate the total annual costs.

c.Another possibility would be to hire additional full-time employees on January and employ him/her for the full year. Calculate the total annual cost. (overtime, subcontract and part-time are not allowed)

d.What would you suggest to Ivar Jorgenson for the best plan? Why