Rina Jey, the manager of operations, is trying to decide what production schedule to set for the first quarter of the year. Demand is soft and current overall projections indicate that sales will only be 75% of the original amount planned for the first quarter. She is aware that at this level of production, it may become necessary to lay off key employees. However, she is able to rent additional warehouse space to store excess inventory, if necessary. As a result, she is considering production of enough ice cream to maintain the current level of staff and make use of the available rental space for warehousing the unsold product.

Required:

a. Identify the ethical issues involved in the decision Rina must make about the level of production for the first quarter of the year. (4 marks)

b. What alternative courses of action could Rina take that may reduce the need to lay off employees? (4 marks)