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Please help me with these questions. Thank you f[1PM secs 1-? #3 UPMFGRMULA is a mediumrsized baby formula production plant in Boston, Massachusetts. The company
Please help me with these questions. Thank you
\f[1PM secs 1-\"? #3 UPMFGRMULA is a mediumrsized baby formula production plant in Boston, Massachusetts. The company has been in business for over 2:] years, mainly producing baby fonnula for infant nutrition indUstry and selling the formula exclusively through its distribution network across the United States. l[fiver the years, DPMFDRMULA gradually expanded its production capacity and consumer base. However. over the past 24 months, the company has been faced with an Unprecedented and unanticipated increase in demand, which has cleared out its storage facilities and exceeded its production capabilities. At this time, the demand continues to be extremely high. The company has an existing storage facility, specically designed for long-term storage of baby formula [controlled climate, humidity, etc.'t, which can be converted to a new production line. The new prodUction line would increase the existing manufacturing capabilities by S'l'u. However, this would require a substantial investment in remodeling of the facility and purchasing ofexpensive equipment from a producer in Amersfoort, Netherlands. To proceed with this option, it would be also necessary for DPMFURMULA to obtain a loan from a bank and hire additional staff. It is estimated that it will take at least IR months for the new production facility to start producing. DPMFORMULA leadership is faced with a dilemma. Ifthey do not expand the current capacity, they risk losing the market share to competitors that are more exible in adapting to higher demand. At the same time, the expansion is veryr costly while the longterm demand is Uncertain. You are hired by GPMFDRMULA as a consultant to help make the right bUsiness decision and to come up with an action plan. Part A Question: How would you recommend for DPMFGRM ULA to proceed? Should it stay with the same production capacity or increase it as described above? Based on the knowledge acquired in the course, please provide a detailed explanation of the rationale for your recommendation. Please describe potential challenges DPMFGRMULA could be facing as a result of your recommendation. State the challenges and explain how you would recommend for DPMFGRMULA to address each ofthose challenges. Part B Question: As an alternative to internal expansion, DPMFGRMULA was just presented with an option to acquire a small-sized baby formula company in San Diego, California. While this acquisition will allow DPMFDRMULA to increase its existing manufacturing capabilities by 50% in just six months, it will be drastically more expensive than converting an existing storage facility to a new production lineStep by Step Solution
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