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Read the following mini case and answer the question below. Bay Yacht Company (BYC) designs and manufactures sailing yachts. It started building special-design (S-D) yachts

Read the following mini case and answer the question below.

Bay Yacht Company (BYC) designs and manufactures sailing yachts. It started building special-design (S-D) yachts for high-income customers. Each customer was in one-to-one correspondence with the designer specifying many details. Soon, BYC became known for its creative designs and high-quality workmanship. Sales increased eventually. Along with this growth came additional opportunities. To secure a piece of the fast growing market in sailing, BYC began manufacturing a new standard, fixed-design (F-D) yacht. Buyers of this line were less conscious of performance, much more price sensitive and imposed more strict delivery requirements compared to S-D yacht customers. S-D yachts still accounted for 60% of BYCs unit sales and 75% of its dollar sales. Currently, all of the Companys yachts are manufactured at high quality at a single plant. Both yacht types share the same resources. The labour force is highly skilled and the equipment is mainly general-purpose to provide the flexibility needed for producing S-D yachts. At present, S-D yacht sales remain strong and F-D yacht sales keep increasing; however, profits arent where they should be. Costs of the F-D yachts are rising. There is excessive raw material and work in process inventory. Lead times for both yacht types have increased. Increasing demand on both product types started to cause capacity problems, and no space is left for further expansion. BYC decided to take a careful look at the overall impact of the new standard furniture line on its operations.

What are the reasons for the occurring problems; what should BYC do to avoid the problems it now faces? Be specific on your answer, justify your points by referring to process strategy concepts. (i.e. flow types, process types, factors affecting process design etc)

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