Biddy’s Bakery was started as a hobby for Elizabeth and her friends and not with the intent to be a big business. Elizabeth’s business had a slow start and operated at a loss for the first few years. When Elizabeth moved her business into a larger building, she did not consider decreases in future profits and customers. When business started out to be slow and then increased slowly, Elizabeth should have taken that as a sign not to be too aggressive in her approach to obtain more space. It would have been a different situation if business would have increased consistently from the time it became known. The expansion to the storage area in the initial location of Biddy’s was a smart decision. It allowed there to be extra space while not taking too much of a risk. “Capacity planning is the process of projecting future capacity needs based on current company use and industry trends. For example, the gradual increase of a production workforce in response to an increase in product demand is capacity planning. A company invests significant resources into capacity planning, including the purchase of new equipment and the leasing of new facilities. Understanding the advantages of capacity planning can help justify the costs” (Anderson). The following are elements that Elizabeth should have considered when evaluating capacity needs before moving into the larger facility:
Monitor Costs
If Elizabeth would have taken into account facilities, personnel, supplies, and production schedules. Periods of growth and recession can be monitored when the capacity level is carefully planned. The company can budget for future changes during this monitoring period. Capacity planning can also be utilized to assist in implementing delivery schedules for supplies and shipping schedules for completed products.
