Capacity Strategy Game Exercise Outline Example | Topics and Well Written Essays - 250 words

Capacity Strategy Game Exercise - Outline Example Building too much capacity and selling my product at a very low price would mean being in the red and paying out interest on accumulated debts during every period (Henderson 2008, p.16). I think that the capacity cost (at GBP 10 per period) is relatively low, and therefore once I have put up entry costs I will stick around for a long time. In this scenario, even if you end up with profits that are relatively low (on top of your starting cash) you will probably earn more than most of your competitors (An & Fromm 2005, p.11). After taking into consideration all the factors mentioned above, I think that a capacity of 200 units would be the best option for me; let me explain why. First of all, minimum demand was 140 BTS while maximum demand was 260 BTS; this gives us a mean of 200. Apart from this, most of the time demand fluctuated between 160 and 240 BTS; this also gives us a mean of 200. In light of the fact that the two most important factors here (the average demand and the average fluctuating figure) both equal 200, it would only be wise to hold 200 units because it appears like that is what the market dictates (Klammer 2006,