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Dean Williams, the manager of Bond Moldings European division, is working on putting together the production schedule for the last three months of the year. The European division had planned to sell 200,000 units during the year. However most recent projections indicate sales will only be 180,000 units. By the end of September, the following activity had been reported:

• Beginning Inventory, January 1 -0-
• Production 60,000 units
• Sales 50,000 units
• Ending Inventory, September 30 10,000 units

Demand has been weak so far and the sales forecast for the last quarter is only 10,000 units.

The European division has the option of renting outside warehouse space to store up to a maximum of 25,000 units. The division has a policy that it needs to maintain a minimum inventory level of 2,500 units to ensure that customer orders will potentially not have be cancelled or shorted.

Mr. Williams is aware that production must be at least 10,000 per quarter in order to justify continuing to pay a small core of production workers. Maximum production capacity is 50,000 units.

Further, fixed manufacturing overhead is a significant portion of the divisions product cost.

Question

Identify and comment on the ethical issues centered on the decision Mr. Williams must make about the level of production for the last quarter of the year.

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