Capacity decisions are strategic in nature because it often requires large amount of capital investment and the impacts (or returns) are in long term. Although managing capacity is an important OM decision, we will need to borrow evaluation tools from finance and accounting to help make sound capacity decisions. You are requested to share your view on comparing those evaluation tools, such as ROI analysis, (single or multiple) Break Even analysis, NPV analysis, etc.
Answer the question below:
What are the differences among ROI analysis, Break Even analysis, and NPV analysis? Which one is more suitable under what situation? Please would you provide an example of capacity decisions and how to apply one or several of those evaluation tools mentioned above?
Please feel free to apply the knowledges you have learned in Finance or Accounting classes, or provide resutls from web search.
