Biddy's Bakery Case Study



Biddy's Bakery Case Study

1. Explain the challenge Elizabeth faced in meeting her capacity needs. What should she have considered before moving into the larger facility?

Elizabeth was short of capacity as her small business experienced slow but steady growth. She assumed that the trend would continue and that she would need a bigger a bigger facility. In this analysis, she went wrong in that she purchased a facility which was much bigger than the space she truly required for the current operations. She estimated that the growth would continue in the next year. She failed to consider two major things. The trend in growth could not have been estimated for a year after as there is uncertainty related with consumer demand. In addition, even if the demand in the next year grew as much as Elizabeth was estimating, it did not make sense that she continued to pay the rental for capacity not used for a whole year (Friedman, 2003).

No wonder, she needed a new facility and the proximity of the new facility was an added advantage but she would have been better off is she waited till she found a place which provided just the amount of space needed for the current operations. In future, if she needed more space, since she was moving into a rented space she did not have to worry about illiquidity of the space. She was in a rented space and could have easily moved out of the rental agreement and shifted to another facility.

2. What is wrong with the proposal made by the team of business students? Why?

The proposal made by the business students suggested that Elizabeth may focus on its specialty and provide McDoogle pie to a single grocery store twice a week. There were two implications on implementing this suggestion. Firstly, the bakery would be targeting a single grocery store which meant that their client base would shrink in terms of number of customers. Secondly, under the new suggestion, the operations would take place in a way that Elizabeth will be making her specialty pie and will be delivering it to the grocery store (Robert, 2002). Since, the required number of pies by the grocery story is high she will not only be using the access space but will also have to let go of her other products in order to meet the grocery store's demands. This ...