Capacity Management at James Bakery
Zan Albert (Zan) and Angela Joveri (Angela), a married couple, had always wanted to work together. Based on Zan’s skills and experience in baking, the couple planned to set up a small specialty business (bakery). They had a little capital to invest and borrowed the remaining from their family, relatives and friends.
Though traditional baking and confectionery business involved long and continuous working hours, high complexity and risk, Zan planned to do the business on a small scale that would involve only normal hours of work, for both himself and his wife. They intended to operate the business on their own, i.e., not having any employees. Zan and Angela decided to specialize in decorated fruitcakes, as Zan had gained proficiency and appreciation for his high-quality fruitcakes. However, Zan always consulted his uncle for recipes and the process. The couple worked hard to bake the samples and packaging the same. They took these samples to nearby retail outlets in the area. Though initially, there was a hint of denial in accepting the samples, the retail outlets received positive customer feedback for the cakes.......................
Assignment Questions
I. With the current method of working, what is the monthly and annual capacity of the business? Is the total weight (kg) of product a useful aggregate measure of capacity for this business? How does capacity compare with demand in 2014 and forecast demand in 2015?
II. Why did Zan have to sell stock at reduced prices in 2014? In which months do you think that happened, and explain clearly the reasons? Justify your answer with simple calculations.
III. Angela believes that they should try to get more business from craft shops and tourist centres. What advantages/disadvantages would this market have compared with the existing retail outlets?
IV. ................
Exhibits
Exhibit I: Production Details of James Bakery
Exhibit II: Company Records of Sales 2013, 2014 and Forecast Sales for 2015