You are head operations planner for Choco Choco Ltd and in charge of developing a sales and operations plan for the coming year. Choco Choco prepares and makes chocolates and ice-creams, both typically require the same preparation time and labour skills. The following planning information is available.

Demand forecasts

Quarter chocolates Ice creams

1 25000 6000

2 19000 10000

3 18000 12000

4 30000 8000

Quarter 1 Beginning inventory is 500 chocolates and 0 ice cream

Production Rates

Regular 500 units per full time employee per quarter of either unit Overtime (max) 200 units per full time employee per quarter of either unit Part-time 400 units per full time employee per quarter of either unit Initial workforce size: 45 full time employees beginning quarter 1.

Production and costs Regular time 15 per hour Overtime 22.50 per hour Subcontract 30 per hour Part-time 36 per hour Inventory: 3 per unit, per quarter, based on average inventory during each quarter. Back order: 24 per unit per quarter based on back orders at end of quarter Hiring 300 per fulltime employee, no cost part-time Layoff 1500 per fulltime employee, no cost part-time

Develop an operations plan that utilises a level or constant rate of output each quarter using full-time regular employees only.

Ending inventory and back orders for quarter 4 must be equal to zero.

Summarise the plan, its costs and its consequences.