Q-4)

Does it make strategic sense to build In-House capacity?

It does not make strategic sense to build in-house capacity due to many reasons. As per the table in
the second answer, the cartridge per shift is more in the buy decision than in the build-in decision.
Further comparing the numbers of the demand and the capacity of each decision we can say that
the build-in decision will not be able to cover the total demand as per the forecasting. Whereas the
decision to buy will be able to cover the demand as per the demand forecasting over 5 years. In the
build-in decision the company will have to train the workers as the inexperience workers may lead to
decrease in the productivity. The time wasted in training the worker will affect the company as the
lesser cartridges will be manufactured and so the demand will not be met. This can be the
opportunity cost to the company as the company might not face any actual loss but this will be a
loss to the company if it does not meet the demand. Furthermore the company might fail to grab the
opportunity of this growing demand if they go with the decision to build-in as they will waste some
time in installation and testing. So if Bergerac decides to build-in then the company will have the
burden of hiring and training the new workers