Describe the most important questions to be answered concerning facilities decisions. Apply the questions to a fast-food restaurant chain with expanding demand.

Question

What will be an ideal response?

Answer 1

How much capacity is needed? In a fast-food restaurant chain, determine the forecast demand and strategically decide the capacity cushion: large, medium, or small.

How large should each facility be? In a fast-food restaurant chain, balance economies of scale with diseconomies with scale and determine the appropriate size.

When is the capacity needed? In a fast-food restaurant chain, the timing may use one of two strategies: preempt the competition, or wait and see. A preempt the competition strategy is more likely in this example because the demand is already known to be expanding.

Where should the facilities be located? In a fast-food restaurant chain, as with most front office services, the facilities must be located near customers. The firm should also consider quantitative factors such as ROI, NPV, transportation issues, taxes, etc. The firm should also consider qualitative factors such as language and norms, worker attitudes and availability, customer attitudes, proximity to customers and suppliers, and competitors.

What type of facilities/capacity are needed? In a fast-food restaurant chain, this will most likely result in a market-focused facility because the service must be near its customers, within the market that it serves.