5. Suppose that Ivar Jorgenson finds out on December 21 that the long-range weather forecast was revised by the weather service and now more snow than normal is predicted. As a result, the marketing department at Sea & Ski raises its forecast for quarter 1 sales of snowmobiles from 9,000 to 11,000 units. 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 600 skis and 400 snowmobiles.

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

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

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 an additional full-time employee on January 2 and employ him/her for the full year. Calculate the total annual cost.