Question

A manufacturer of electronic accessories for use in computers currently has a capacity of 40,000 pieces per month. the business strategy group for the company recently performed a forecasting exercise to assess the emerging demand for the accessories in the next five years. the study revealed that there is a 40 per cent probability that the growth in demand for the accessories will be strong during this planning horizon and a 60 per cent probability that the growth in demand will be moderate. the study identified three options for the manufacturer to augment capacity. option 1 is to expand the capacity by adding new capacity to meet the demand. option 2 is to augment capacity in the existing factory itself by some de-bottlenecking operation (in which case there will be limits to capacity expansion. option 3 is to go for subcontracting. if there is a strong growth in demand, then the new capacity could be added a year later.

Answer 1

An electronics accessory manufacturer who currently is capable of producing 40 thousand pieces a month It is forecast that a 40% chance that they have a strong demand and a 60% chance it will be moderate. Ideas to offset this forecast are . Adding new capacity to meet demand. Freeing up operations by streamlining . Adding more employees or subcontractors. New demand will depend on growth the next year.