Author Topic: Help regarding purchasing used plant capacity. And can you buy your own?  (Read 4894 times)

sparhawk_bsg

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We are current in our third week in the BSG and our industry is already extremely overproducing shoes, and since I ended up underpricing last year in the private label due to not receiving a bid I am looking for a method to reduce my shoes temporarily this year.  I was looking at selling 1000 capacity of the plant I just bought in Latin America, and since I just upgraded option C I will receive around 52 million for selling of capacity.  The question is can you just buy back the capacity you sold in the next year?  And if so a more important question since used capacity sells for 80% of new price wouldn't I actually be making a profit on this transaction?  Help would be greatly appreciated thanks!

WinBusinessStrategyGameTips

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Re: Help regarding purchasing used plant capacity. And can you buy your own?
« Reply #1 on: October 16, 2015, 10:24:15 AM »
Yes you can buy the capacity back the following year.

You are selling the capacity at 50% of the value and buying it back at 75% of the value.

Therefore you are actually losing 25%.
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sparhawk_bsg

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Re: Help regarding purchasing used plant capacity. And can you buy your own?
« Reply #2 on: October 16, 2015, 11:39:18 AM »
Thank you for the reply.  I am able to sell the plant for 52 million and even buying new capacity is only 48 million so even in this I will not lose money.  I understand that it only gives you the NPV after depreciation, but since I also did upgrade C it is showing a NPV to sell it more than even building new capacity let alone buying used capacity.  The next question would be do you lose the upgrade when you sell off part of the capacity?  I would assume not but it is better to be safe.  Thanks again for your timely reply!