Ben Rishi is operations manager for a factory making saucepans. The weekly maximum capacity of the factory is 3000 units. The main limit on capacity is the old-fashioned machine for stamping out the metal pans from sheet metal. Purchasing another machine would be expensive and would require an extension to the building. Workers are working very long shifts. Ben has also been working long days to ensure that all the factory works at full capacity. For the last three months, demand has been high and last week there were orders for 3100 pots. Ben is under pressure from his managing director to see that this number is produced. Ben is unsure whether to recommend purchasing the new machine or to buy in components from another firm in the city that has spare capacity.

 

1. Outline the two problems facing Ben because his factory is operating at full capacity. [4]

2. Explain why Ben Rishi might choose to purchase a new machine rather than buy in components from another firm. [4]

3. Analyze two cost advantages Bens business might gain if it expands its scale of production. [4]

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1 Two problems facing Ben due to operating at full capacity Operational Constraints The factorys old... View the full answer