ABSTRACT

Peter King, the manufacturing supervisor of a supplier to Fired Motors, is faced with a tough decision regarding investment in capacity expansion at a manufacturing plant in Pontiac. His research has narrowed down his investment options to four, but he is having dif‚culty choosing because of the uncertainty surrounding these alternatives. What is the short-term demand for the product? How long will Fired Motors keep the product in its lineup? Will the OEM maintain him as the sole supplier or hedge its risks by multisourcing? What would be the payback period and return on investment? (ROI)

The product development team at Dial Inc., a manufacturer of PCs, is trying to de‚ne its products amid technological uncertainty. The team must decide between two alternatives: (1) a proven technology that is known to be viable or (2) a prospective technology, Lion, that offers superior price-to-performance results but whose viability is uncertain. What should the ‚rm do?