1) What is your recommendation for Mr. Weir? What factors should Mr. Weir consider in deciding whether to adopt level production?
2) What are the total savings from adopting level production?
3) Estimate the amount of funds required and the timing of the needs under level production. Does Polar need more than $4 Million in short term financing in any given month?
4) Thinking about Polar’s Bank, as their banker would you be willing to extend the line of credit to more than $4 Million to finance level production? Why or why not?
5) What other sources could substitute in part for bank lending if the lender is not willing to extend the present line of credit?
6) Compare the liability patterns feasible under the alternative production plans. What implications do their differences have for the risk assumed by the various parties?
7) What would be the impact of unsold inventory on cash flows and projected cost savings?
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