BUS FPX 4014 Assessment 4 Planning and Facility Location

Student Name

Capella University

BUS-FPX4014 Operations Management for Competitive Advantage

Prof. Name

Date

Component #1: Operations Management Issue Analysis

The primary operations management issue in the scenario is determining the best expansion strategy for Jackson’s facility, considering the return on investment (ROI). There’s a need for expansion, but the decision hinges on whether to opt for a larger expansion (LE) or a smaller one (SE) with potential subsequent expansions. The analysis involves assessing probabilities of high and low demand scenarios:

• Probability of High Demand: 60%
• Probability of Low Demand: 40%

The SE entails an initial profit estimation of $35,000, potentially necessitating a second expansion with a combined profitability of $55,000 in case of high demand. On the other hand, the LE promises an estimated profitability of $90,000 with high demand but drops to $52,000 if demand turns out to be low.

BUS FPX 4014 Assessment 4 Planning and Facility Location

Component #2: Decision Analysis

To make a decision, we need to consider possible scenarios, their probabilities, and profitability:

• Small Expansion (SE):
  • High Demand: $55,000 (probability: 60%)
  • Low Demand: $35,000 (probability: 40%)
• Large Expansion (LE):
  • High Demand: $90,000 (probability: 60%)
  • Low Demand: $52,000 (probability: 40%)

Based on the analysis, it’s advisable for Jackson to pursue the LE. Regardless of demand scenarios, the LE offers higher profitability compared to SE, without the need for potential subsequent expansions that might impact patient services.

Component #3: Load-Distance Analysis

Conducting a load-distance analysis involves calculating the final load distance (LD) numeric value. The objective is to minimize LD by placing stations closer to each other:

• Final Load Distance Calculation: 27,960

The outcome suggests consolidating stations in close proximity to reduce travel distances between them.

BUS FPX 4014 Assessment 4 Planning and Facility Location