The Justification of a packaging line based on capacity issues

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Title: The Justification of a packaging line based on capacity issues
Author: Ho, Chin
Abstract: Due to the phenomenal increase in the long range marketing forecast for the products manufactured at the Garden City site of DuPont Merck Pharmaceuticals, a capacity problem was identified. This paper evaluates the impact of the increased forecast and demands on the packaging operations, and also the justification of a packaging line to support the expected capacity overload. It addresses different alternatives available to the company to support the demand and evaluate these options based on cash flow analysis. In addition, the study allows the general reader outside the company to understand the methodology involved in the justification of a packaging line and the tools to evaluate such a project. Based on the excellent financial results of meeting the product demand internally versus outsourcing this demand to a contract packager, this study recommends that management approve the funding for the project.
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Date: 1997

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