Garland Chocolates Q5 n Q6 PDF

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5. What are the risks of investing in the new equipment and continuing to produce? While taking the option of investing in the new equipment and continuing production, there are a number of risks to be handled. First and the foremost the cost of replacing the equipment would cost around $600,000 initially but the company can recover this cost in long run. Next, bringing in new equipment would slow down the production line due to initial adjustments, modifications and tuning leading to falling consistency. Moreover, the employees need to become familiar with the new equipment and its production process in order to keep their productivity and efficiency. 6. How does your analysis change if service levels declined? If the service levels declined, I would suggest replacing the equipment as soon as possible thereby preventing further loss to the company. Even though we have identified a number of risks we can overcome those in long run. Additionally, the efficiency of packing is way par below the company standard (BPO) at 48% and high scrap rate of nearly 10%. This can lead to production delay and not attaining productivity to match the market demand. Therefore, in my opinion it is crucial to replace the equipment to gain maximum production efficiency and service levels....