Operations Management Long Term Expansion Strategies

+ Operation Management + Strategies for Capacity Planning/ Substantial Expansion K.J.Sanjit Roll No#59 PGPME-14, Great lakes IEMR, Gurgaon + INDEX Table of Contents K.J.Sanjit Roll No: 59 PGPME-14, GLIEMR INTRODUCTION SUMMARY .............................................................. 3 CHAPTER#1: CAPACITY PLANNING ..................................................... 4 Break-even analysis ........................................................................................................... 4 Long-term capacity planning on the basis of different variables ....................................... 6 CHAPTER#2: CAPACITY EXPANSION STRATEGIES ................................. 8 Capacity leading demand strategy†¦show more content†¦While doing the planning, not only the actual costs like- production, infrastructure, logistics and inventory costs, but also the opportunity costs for lost sales due to inability to supply on time and revenue gains due to quick response should also be taken into account. Many companies falters in their strategies by focusing only on the actual costs and the costs for upgradation while ignoring the opportunity costs, thus losing the opportunity to make more profits and improve market share. Many a times they even lose the current market and lag behind with increasing competition. A strategist should also consider the demand patterns as well as current supply capabilities. The infrastructure and production costs can be brought down by producing those products together, which have countercyclical patterns of demand, by sharing the facilities of an external resource or companies and by changing the demand time pattern. vï  ¶ Break-even analysis: Break-even analysis is a technique, which is used for evaluating process and equipment alternatives. In other words it helps to evaluate whether the capacity expansion would be a beneficial option for the company or not, and how long will it take to recover the money required for the expansion. The objective for the break-even analysis is to find the point in in terms of money and units at which the cost equals revenue. It requires estimation of fixed cost, variable costs and revenues involved inShow MoreRelatedSwot Analysis Of Pepsico1602 Words   |  7 PagesFocusing more on operations management which is a key core to operating a successful company like PepsiCo. Significantly the mission statement of this company states â€Å"As one of the largest food and beverage companies in the world, our mission is to provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats. 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