Genentech- Capacity Planning Harvard Case Solution & Analysis

Genentech- Capacity Planning Case Solution

Expansion of CCP3

From the following analysis, it can be seen that the company should not expand CCP3 due to the fact that the service would require another plant facility, which would be subjected to high cost of operations as well as wage rate of the labor. This indicates that a particular labor before the execution consisted of 550 in numbers, whereas after the implementation of the plant and being ready to incorporate CCP3, the number of the workers would exceed by 1000 at the end of the production availability.

genentech capacity planning case solution

genentech capacity planning case solution

Thus, this could negatively affect the entire operations through high inventory level as well as it would make it difficult to manage things suitable for proper penetration level of the products. Another reason why this facility should not be included is the fact that poor location would not allow to run the proper operational activities because of the internal economic issues such a sun availability of the resources, lack of competent labor and high cost of overheads.

From all these perspectives, it is determined that Genentech should follow the stable process of utilizing 1200 production tanks and not considering its further expansion because it would increase the overall costs and reduce the market penetration level with huge inventory in-house. In an accounting theory, it clearly states that more inventory would lead the company to incur loss due to excess storage of inventory and the probability that the inventory would be expired before being delivered.

Same was the case for Genentech, as if it would follow this process, then it might be considered that the over storage of inventory level would increase the cost subjected to the decline in revenues and profits. In the case of CCP3, 12 tanks would produce 50,000 of liter capacity, which is very high as compared to the previous facility criteria (CCP2).

It also seems that the previous one was not successful for its implementation to produce more penetration rate. Therefore,with all these historical results, it is concluded that Genentech should focus on the traditional way (CCP1) and not allow to expand its product due to high market fluctuations and uncertainty of penetration rate, which would have negative impact over the company’s entire performance.

Target location for CCP3

Based on the following situation, it is concluded that if Genentech would move forward its new facility of CCP3, then it is determined that it should choose a suitable location for the resource availability as well as strong economic concern. For example, if the production plant would be made in a developed economy like US, then it would have various advantages such as more competent workforce as well as resource availability.

On the other hand, it would be better for Genentech to choose such a location however,such location would require high investment as well as more market penetration rate to be in a safe position against the established competitors. Most of the analysts indicated that the more established economy consists of more competition, whereas, an emerging economy had less competition and thus, allowed the new player to easily step to the market however,the problem is such markets consist of poor production level subjected to lack of workforce and resource availability.

In the case of CCP3, it has been analyzed that the production plant should be developed in an emerging economy because it would require less wages and low cost of production as compared to the developed one.However, there are various hurdles that the company would face during the construction process. These hurdles consist of the lack of time to complete the project due to some reasons such as economic downturn, internal problems under the lack of resource availability on time or the lack of competency of labor to conclude an accurate production level till the end...........................

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