Question

Your Competitive Intelligence team is predicting that Chester will drastically invest in adding capacity to their plant this year. Assume Chester's product Cake uses 50% of the current production capacity, and the remainder of the company's production and outsourcing capacity is split among the other products. If Chester adds 20% to their current capacity this year, how many units of Cake will they be capable of producing? Ignore current inventories. Figures in thousands (000).

1,675

3,350

4,020

2,010

Plant Details Andrews Digby 2,900 Baldwin Chester Capacity Automation 3,600 3,250 3,350 Average Material Costs $8.89 $13.36 $0.00 $13.05 $12.79 $9.05 $6.51 $6.66 Average Average Labor Costs Shipping Inventory Inventory Inventory Average Units Sold Production Outsource Americas Name Europe Asia-PacificPrice 135 Able Acre Arrow Baker Bold Cake Cookie Daze Drive Dare $27.67 $37.33 $0.00 $39.00 $39.50 $27.25 $26.50 $23.50 $36.25 $0.00 $9.98 $9.28 $0.00 $9.48 $9.02 $6.21 $7.43 $5.55 $7.10 $0.00 $2.31 $2.11 $0.00 3725 2277 1888 232 207 1394 1287 425 322 0 2147 1316 2333 1608 2156 745 1683 1534 2178 1138 450 204 205 357 287 208 $1.35 $1.01 $0.85 $1.86 $1.21 $0.00 350 0 550 305 594 250 0 0 $0.00

Answer 1

All figures are in thousands (000)
Current capacity of Chester			3350 units
Increase in capacity proposed			20%
Hence Increased capacity of Chester =1.2*3350= 4020
Qty of total capacity used by Cake = 50%
Hence Cake's increased capacity = 50% * 4020= 2010 units