Hi,

Answering the 1st and the 2nd question, the several things that I will look at:

1) Demand - look at the current demand and the demand growth projections

2) Capacity - understand the current capacity in the number of units / labor time / machine time

3) Utilization - understand if the capacity is underutilized. If so - go through the value chain and try to find the bottlenecks

4) Costs and benefits - estimate the potential benefits of the capacity increase vs the investments needed

Answering your 3rd question there are the two levers:

1. Increasing capacity via labor / machine time - more total working hours / shifts, more people, more machines, etc
2. Improving utilization by removing the bottlenecks, improving demand planning, removing peaks, etc

Best!

Hi Anonymous!

Quick answer to your 3 questions (and yes, the questions are very broad and unspecific ;))

1. The central notion to consider should always be value creation. Hence, you need to ensure that the additional value that can be created by means of a capacity expansion significantly exceeds the corresponding investment cost over a focal time frame. This additional value can stem from additional revenues (due to higher output) or higher cost efficiency (due to better yield/output per input unit).

2. Here I would recommend to analyze each step of the value process chain and identify the bottlenecks that determine capacity.

3. Rank the bottlenecks in inverse order of current capacity and identify the cost of removing each bottleneck relative to the additional output that can be generated (unit cost of additional output). as long as these unit costs are lower than the expected revenue per additional unit, it makes sense to remove the bottleneck and hence expand the capacity.

Cheers, Sidi