A company is introducing crochet and hand knit kitchen towels in the Canadian market on 1^st of April 2022. Companies like William Sonoma, and Bed, Bath and Beyond dominate this market. However, these companies mostly sell cloth kitchen towels, and target an older demographic. With the growing demand for crochet and hand knit towels, the company estimates that they can sell 1.8 million of these towels in 2022. The promotional price is set at $8 per towel. The inventory carrying cost is 20% of the yearly average inventory value. The industry growth is expected to be 7% year over year. Your group have been hired as consultants to answer the following questions:

1. The company is building a facility to produce 3 million kitchen towels per year, in Asia. Is this capacity just right, too little or too much?
2. What factors will you consider in building capacities?
3. Should they adopt a: a) leading strategy, b) lag strategy or c) straddle strategy to build further capacities. Please justify.