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

In the given scenario, Jackson’s facility faces a significant operations management challenge in determining the best strategy for expansion while considering the return on investment (ROI). The decision-making process is crucial as it involves weighing the options of a Larger Expansion (LE) versus a Smaller Expansion (SE), followed by potential subsequent expansions. An in-depth analysis is necessary to evaluate the probabilities associated with different demand scenarios, as follows:

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

For the Smaller Expansion (SE), the initial profit projection is $35,000. However, if demand turns out to be high, a second expansion may be required, leading to a combined profitability of $55,000. In contrast, the Larger Expansion (LE) offers an estimated profitability of $90,000 under high demand conditions but drops to $52,000 in case of low demand.

Component #2: Decision Analysis

To make an informed decision, it is essential to analyze various scenarios, their associated probabilities, and the resulting profitability outcomes. The profitability projections for both expansion options are as follows:

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 of these probabilities and profitability outcomes, it is recommended that Jackson pursue the LE option. This strategy offers higher profitability in both high and low demand scenarios compared to the SE. Furthermore, the LE eliminates the need for subsequent expansions, ensuring a more stable and efficient growth path for the facility without impacting patient services.

Component #3: Load-Distance Analysis

A load-distance analysis is performed to determine the most efficient arrangement for the stations, with the goal of minimizing the load distance (LD). This involves calculating the final LD numeric value, which is crucial for optimizing facility layout and reducing operational inefficiencies. The calculation of the final load distance yields a value of 27,960, indicating that consolidating stations closer to each other is the most effective strategy to reduce travel distances and improve overall operational efficiency.

Summary of Scenarios and Probabilities

Expansion Option	High Demand Profitability	Low Demand Profitability	Probability of High Demand	Probability of Low Demand
Small Expansion (SE)	$55,000	$35,000	60%	40%
Large Expansion (LE)	$90,000	$52,000	60%	40%

References

Author, A. A. (Year). Title of book. Publisher.