Biddy's Bakery

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

Capacity is the maximum output rate that a facility achieves. Planning for capacity needs is essential to the successful operation of a facility for a company. Elizabeth faced challenges because there was no capacity planning, which involves the process of establishing the output rate that can be achieved by a facility. (Reid & Sanders, 2010, pg. 316) If there is no careful planning, there may not be enough output capability to meet customer demands or that there could be too much capacity sitting idle. If a company wants to grow and take full advantage of demand, capacity should be carefully planned. (Reid & Sanders, 2010, pg. 317) A lot of capacity planning and demands relies heavily upon customer demand and knowing how to meet those demands. For example

There are several needs that are part of capacity planning that Elizabeth should have considered before making the move to a larger facility. The first that should have been determining the market need of the community. Determining the amount of baked goods that would be sold would have helped her understand the space necessary for purchase. After determining the market need, research on the premises, location, prices, and other pertinent information should be obtained to ensure that the proper capacity is used for the physical premises of Biddy’s Bakery.

2. Determine what is wrong with the proposal made by the team of the business students and why.

One major issue of the proposal was the fact that they planned for Biddy’s Bakery to primarily focus on the production of the McDoogle pie in large volumes. According to Balachandran, Balakrishnan, and Sivaramakrishnan, Organizations typically make long-term cost commitments to acquire certain resources because it is more economical to do so than to acquire them on an as-needed basis. (Fall 1997, pg. 49) There are several products that Biddy’s Bakery sells, and it would be important to focus on the other goods to ensure that all the products get a chance to boost Biddy’s to the next level of marketing. Although the McDoogle pie is the best-selling good at Biddy’s, there are still several other products that could boost sales and help with the overage in capacity that Elizabeth is now facing because of improper planning and research.

By listening to the students, Elizabeth would almost surely set herself up for failure because the recipes and ingredients for the production of the other baked goods, would cause a high loss in profits. Elizabeth would more than likely create a deficit in which would add to the over capacity that she is already experiencing.

3. Explain how the business would be different if Elizabeth accepts the proposal made