LOCATION

The Indian government has recognized the long-term importance of 3D printing and the use of carbon fiber in
many new products. It would like to become the worldwide hub for both technologies. Therefore, it is offering
very favorable economic incentives to locate 3D, carbon fiber production facilities in the outlying communities
around Bangalore, the technology hot spot of India. You and your competitors will be able to take advantage
of this opportunity by locating in the Bangalore area.

Going forward, you will not be able to change the production location or add new production facilities later,
but you will be able to increase the production capacity as your sales grow in the future.

PRODUCTION PROCESS
Each day, all sales orders will be transmitted to a single production facility in Bangalore. Each order will
include the dimensions for a customized frame.

Each buying customer will be measured or will fill out a size specification form to ensure a perfect fit for the
customer’s size, shape, weight and biking preferences.

At the end of the day, the fabricated bikes will be boxed up, loaded into containers, and shipped. The bikes will
go directly to the store where the customers will be invited to pick up their bike or the container will go to a
break-bulk operator that will arrange for the bikes to be delivered directly to the buyers.

Shipping will be done using airfreight. There will be no inventory stored at the production facility, in transit
(for more than 2 days), or at the store. All orders will be fulfilled in the same quarter the sale is made. The
shipping expenses will be charged to your firm and not the customer.

FIXED CAPACITY
Fixed capacity will be determined by the number of 3D printers that are installed.

High quality 3D printers are expensive and will be treated as fixed assets, including depreciation.

Each 3D printer can produce one bike frame per hour. Assume the production facility will run 8 hours/day, 5
days/week, 13 weeks/quarter (65 8-hour days). Therefore, a 3D printer can potentially produce 520 bikes
during normal business hours per quarter (8 * 5 * 13).

The decision to add fixed capacity is to decide how many 3D printers to install at the production facility.

OPERATING CAPACITY
Operating Capacity determines how much of the fixed capacity is used in any given day, and therefore, the
number of units that are produced each quarter. It is possible to adjust operating capacity up or down by
turning on and off the 3D printers. This change, in turn, affects the number of workers employed.

Operating capacity must always be less than or equal to fixed capacity.

Your manufacturing strategy and decisions will focus on

1. investments in fixed production capacity and

2. the scheduling of operating capacity.
Your production facility will be located in Bangalore, India.
Selections are indicated using an "X".
Fixed Capacity Increase
Selecte 3D Units/ Units/
Capital Investment Capital Costs/Unit
d Printers Day Quarter
Blank 0 0 0 0 0
Blank 1 8 520 240.000 30.000
2 16 1.040 480.000 30.000
Blank 3 24 1.560 720.000 30.000
Blank 4 32 2.080 960.000 30.000
Blank 5 40 2.600 1.200.000 30.000
Blank 6 48 3.120 1.440.000 30.000
Blank 7 56 3.640 1.680.000 30.000