Chapter 3

1. Explain the challenge Elizabeth faced in meeting her capacity needs. What should she have considered before moving into the larger facility?

Elizabeth was running out of space in her old facility, and had unused space in her new facility. She should have considered her process type before upgrading to a larger facility, and if she would have she would have known she had a batch process operation going on, and the need for a lot more capacity wasn’t as important sense she is catering to customer specific orders placed ahead of time, and thus inventory would remain low.

2. What is wrong with the proposal made by the team of business students? Why?

Elizabeth has a make-to-order strategy. She doesn’t keep much of an inventory because customers place the orders, and the product is made. The business students want to turn her strategy into a make-to-stock strategy, which would fix her capacity problem, but change her strategy.

3. What type of operation does Biddy’s Bakery currently have in place? What type of operation is needed to meet the proposal made by the team of business students? Explain the differences between these two operations.

Biddy’s Bakery is set up with a make-to-order strategy, and would have to shift to a make-to-stock strategy to facilitate the high volumes of of McDoogle pies to be delivered twice a week. In a make-to-stock strategy the product is made and put into an inventory until the customer orders it. In a make-to-order strategy the customer places the order and the product is made to accommodate their needs.

4. Elizabeth senses that the business would be different if she accepts the proposal but does not know how and why. Explain how it would be different.

Elizabeth would go from essentially no inventory of finished goods to having a high inventory of one finished good. This would factor in