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Capacity Planning and Facility Location

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Please review the attached Data Tech, Inc. case study and help me respond to the following:

1.Determine whether Jeff should give greater priority to a smaller facility with possibility of expansion or more into a larger facility immediately.
2.Determine weights for the two (2) capacity factors based on your finding above and discuss how you concluded these were appropriate weights.
3.Once you have selected the factors for the two (2) capacity alternatives, use factor rating to select a new location for Data Tech.
4.Determine how your factor analysis would be different if you had selected a different capacity alternative.
5.Include three (3) external peer-reviewed sources to support your position.

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The solution discusses capacity planning and facility location.

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1. Whether Jeff should give greater priority to a smaller facility with possibility of expansion or into a larger facility immediately.
In order to determine which alternative Jeff should give greater priority immediately, various factors will be analyzed through the decision tree analysis.

Jeff would have to choose between whether to take facility with excess capacity or one with the potential for expansion. At decision point one above, if he takes the location with excess capacity, the expected value of this decision will be:

EVexcess capacity = 0.30($600,000) + 0.70($1,000,000)
EVexcess capacity = $180,000 + $700000
EVexcess capacity = $880,000

If he takes the location with potential for expansion, then the expected value of this decision will be

EVpotential for expansion = 0.30($500,000) + 0.70($800,000)
EVpotential for expansion = $150,000 + $560,000
EVpotential for expansion = $710,000

From these calculations it can be noted that in the first decision, since EVexcess capacity is greater than EVpotential for expansion, that is $880,000 > $710,000, then his immediate decision would be to take the facility with excess capacity. In the second decision point, Jeff would choose to expand as ...

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