You have been given the assignment to read Beer School: Bottling Success at The Brooklyn Brewery. Upon completion of reading this informative book dealing with this real life rags to riches entrepreneurial….
Identify ways of increasing capacity, and consider the costs and benefits of doing so.
Bob & Fred, Inc., has a bottleneck operation whose capacity is 100 units per day. Other operations have a capacity of 120 units per day. Each unit has a throughput margin of $80. The bottleneck operation employs 2 workers, each of whom could run 3 machines. The operation currently has 5 machines, each of which can process 20 units per day. Bob & Fred could hire additional workers at $120 per day, or could rent an additional machine for $2,000 per day. Identify ways of increasing capacity, and consider the costs and benefits of doing so.