Choose a company that you work for or one that you are very familiar with. The company
Question:
Choose a company that you work for or one that you are very familiar with. The company can be one that provides goods or services to its customers.
Explain the different processes involved in its Operation and Supply Chain Management (OSCM).
Explain the characteristics of efficient and agile supply chains. Discuss whether a supply chain can be efficient and agile at the same time.
HOMIE food manufacturing company needs to make capacity decisions to produce a new product line to export to the regional market. As chief operations officer of this company, you are considering three options in the face of considerable uncertainties over the next four years:
Option 1: Build a new factory, - New site cost is $6 million, - Payoffs: Strong demand = $12 million; Weak demand= $10 million.
Option 2: Expand at current site, - Expanding current site cost is $9 million, - Payoffs: strong growth = $14 million; weak growth = $10 million.
Option 3: Do nothing. Not constructing a new factory or expanding at the current site would result in no additional revenue being generated because the current facility is not able to produce the new product line.
Use the decision tree technique to help HOMIE in evaluating the capacity alternatives. Assume the probability of demand being strong is 40%. (Note that you need to construct the decision tree in your answer.)