Case Study"УLocation of Capacity Decision: Chip World Inc.
Current demand for this product is set at 2,000 units per year. Recent studies have shown that demand will double 2 years from now, and will then reach 12,000 units in 6 years time. If the planning horizon was only 2 years, which site would you recommend How would your recommendation change if the planning horizon would be 6 yearsThe choice of the site should logically be decided by where the cost to produce is minimum. For this, we add the fixed cost and the variable cost for various levels of production to determine which site proves to be the cheapest.