FIXED CAPACITY

Fixed capacity will be determined by the number of $3$D printers that are installed.

High quality $3$D printers are expensive and will be treated as fixed assets, including depreciation.

Each $3$D printer can produce one bike frame per hour. Assume the production facility will run $8$ hours$/$day$,5$ days$/$week$,13$ weeks$/$quarter $(658-$hour days$).$ Therefore, a $3$D printer can potentially produce $520$ bikes during normal business hours per quarter $(8*5*13).$

The decision to add fixed capacity is to decide how many $3$D printers to install at the production facility.

OPERATING CAPACITY

Operating Capacity determines how much of the fixed capacity is used in any given day, and therefore, the number of units that are produced each quarter. It is possible to adjust operating capacity up or down by turning on and off the $3$D printers. This change, in turn, affects the number of workers employed.

Operating capacity must always be less than or equal to fixed capacity.

Your manufacturing strategy and decisions will focus on

investments in fixed production capacity and

the scheduling of operating capacity.

Theoretically, it is a simple decision to determine the number of $3$D printers needed for the next quarter. Specifically, divide the projected demand by the number of bikes that can be produced by a single $3$D printer, and then round up to a whole number. That is:

FORMULA

Fixed capacity required for next quarter $=$ Number of $3$D printers needed to meet demand

Number of $3$D printers needed to meet demand $=$ Projected demand for quarter $-$: Quarterly production capacity of a $3$D printer.

YOUR TASK

In the current quarter, you have one very important tactical decision to make: an investment in the capacity of your production facility. How many $3$D printers will you order for the next quarter?

It takes one quarter to have a $3$D printer produced by the supplier and have it shipped to the production facility.

You currently have zero $(0)$ fixed capacity. At the very least, one $3$D printer will need to be ordered; two might be desirable.

DECISION TIP

During your first test market, it is not likely that your firm will sell more than $6$ bikes per day over the $78$ potential selling days of the quarter $($the store will run $6$ days per week for the $13$ weeks of the quarter$).$ That is a total of $468$ bikes for the entire quarter $(6*78=468).$