7. On December 22, Thor Ledger informs Ivar that the cost of capital will be extremely high next year. As a consequence he asks him to develop a radically different type of sales and operations plan based on a chase strategy and the data from problem 4. Ending inventory is to be zero at the end of each quarter. The VP of manufacturing says he realizes this type of strategy will require him to adandon his beloved “level” strategy and asks Ivar to vary the total output rate from one quarter to the next. When necessary to do so, the following options and priorities should be used in developing the required output each period.

Priority Option Limit (maximum)

1 Full-time employees (FTE) 500 units/quarter/worker 2 Overtime (FTE) Up to 200 units/worker 3 Subcontract Up to 5,000 units/quarter 4 Part-time employees Up to 25 workers/quarter Finally, the personnel manager reports that because of end-of-year retirements, only 36 (not 44)
full-time employees will be on the payroll as of January 2.

a. Develop a chase plan that varies the number of full-time workers per quarter to meet demand without using overtime, subcontracting, or part-time employees.