BIDDY'S BAKERY CAPACITY NEEDS Case Study Analysis: Biddy's Bakery Capacity Needs

The challenge facing the Biddy's Bakery is excess capacity caused by a low production capacity than what is optimal for the bakery and its resources. This implies that the demand for Biddy's products in the market is below what the bakery can potentially supply to the market. The excess capacity arises from management's decision to buy a larger production capacity to accommodate its growing production needs. However, the new production facility is in excess than the bakery's current production rate and market demand for goods. This excess capacity is causing inefficiencies and making the bakery incur extra costs and loses in its market share.

This problem arose from Elizabeth's decision to move the bakery and its operations to a larger facility following the bakery's outgrowth of its previous capacity. The management made this decision from the presumption that the new facility would cater for business, which was expected to continue growing. However, this decision has greatly affected the performance of the bakery. This is because capacity decisions are essential in determining the limit of output and provide useful insight into the operating costs (Ananth & Jain, 2004). This implies that strategic capacity planning is essential if a business is to reach an optimal level in production capabilities and meet market demands.

Prior making the decision on expanding the bakery's facilities, Elizabeth needed to make several considerations. First, Elizabeth needed to consider the bakery's capacity needs entailing space, equipment,...

As a manager, she should have considered production capabilities failures like high costs, loss of customers strain on resources, and demand failure. To avoid these failures, capacity planning should have considered changes in capacity, changes in demand, environment, and changes in technology (Vakili & Huang, 2004). Capacity planning of facilities should also have entailed long-term capabilities and supply of the bakery, and long-term demand (Ananth & Jain, 2004). Lastly, Elizabeth should have sought alternatives in capacity, product lifecycle, and factored in quantitative and qualitative aspects of the business. These are like public and consumer opinions, economic factors, and preference of stakeholders.
The proposal made by the students poses a risk to the business. Concentrating on producing and distributing one product McDoogle pie in large quantities, to a single consumer increases the risk level of business. This is because the pies would optimize the excess capacity, but would eliminate a section of Biddy Bakery's market share that buys other goods. Secondly, this proposal overlooks the fact that the product is at its plateau stage in the product lifecycle. This implies the market share for the product is becoming stable and constant as the product reaches maturation (Ananth & Jain, 2004). By supplying this single product, Biddy's Bakery will increase manufacturing capacity, optimize facility capacity. This will reduce the production costs created by excess capacity, but it will lead to the bakery concentrating all its resources on one product. The strategy also undermines…