4. On December 20 (the end of the fourth quarter), the head operations planner for Ski & Sea, Inc., is in charge of developing a sales and operations plan for the coming year. Ski & Sea assembles jet skis and snowmobiles from subassemblies and component parts provided by reliable vendors. Both products (end items) utilize the same small engines and many of the same parts. They require the same assembly time and employee labor skills. The available planning information is as follows:

a. Develop an operations plan that utilizes 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.
Summarize the plan, its costs, and its consequences.

b. Prepare a cumulative chart for your plan in part a of this problem.

c. If each shipping container for completed jet skis and snowmobiles requires 20 cu. ft. of space, what is the maximum finished-goods warehouse space you will need next year if the plan in part b of this problem is adopted?

d. If the cost of each completed end item is $600, what is the maximum amount of capital that will be tied up in finished-goods inventory during the year?

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Sales Plan Quarter Jet Skis Snowmobiles 1 10,000 9,000 2 15,000 7,000 3 16,000 19,000 4 3,000 10,000 Anticipated Quarter 1 Beginning inventory Production and costs Regular time 600 Jet skis 400 Snowmobiles $15.00 per unit $22.50 per unit Overtime Subcontract Part-time Inventory Back order Hiring Layoff Production rates Regular Overtime (max.) Part-time Initial workforce size Additional assumptions $30.00 per unit $36.00 per unit $3.00 per unit per quarter, based on average inventory during each quarter $24.00 per unit per quarter (based on back orders at end of quarter) $300.00 per full-time employee (no cost if part-time) $1,500.00 per full-time employee (no cost if part-time) 500 units per full-time employee per quarter (of either unit) 200 units per full-time employee per quarter (of either unit) 400 units per part-time employee per quarter (of either unit) 44 full-time employees (beginning of quarter 1) 1. Part-time employees may not work overtime. 2. Assume 100 percent utilization of employees on regular time (i.e., all employees on the payroll during a period produce at least 500 units). If overtime is used, up to another 200 units can be produced per employee.