Flat capacity strategy, Mechanical Engineering

What is the total value added by the new workshop in Year 1 of the 5-year plan?

Assuming that the average quarterly demand is maintained over the remaining years of the 5-year plan, what is the payback period of the new workshop, to the next higher whole quarter?

Graphically show the cumulative net cash flow for each quarter of the project period. Does this match your calculation from Task 9?
5. Discussion and recommendation

Based on what you know about demand, customer flexibility and financial appraisal, discuss your findings and recommend a course of action.

Consider, for example, and among other things:

• Is the assumption of levelled demand feasible in the modern world?

• Is the "flat capacity" strategy used here a sensible one? What others might be employed to deal with fluctuating demand? What alternatives to capital installation might the be?

• Is annual demand likely to stay steady for 5 years just to make analysis simple? Is simple payback analysis the only one that can be used, or are there others?

• How would your analysis change to deal with short-term fluctuations and rising trends?

• Ultimately, what form would you recommend the company's investment in the workshop to take?

Posted Date: 3/12/2013 1:09:54 AM | Location : United States







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