‘Freshju’ is a trading company, selling bottled juices made by other
manufacturers. Now, it planned to sell its juices across India. For this,
‘Freshju’ decided to enter into ‘Juice manufacturing’. It also has
ambitious plans to export its juices to other countries in the future. To
meet anticipated higher demand in future, the company set-up a larger
manufacturing unit. The Chief Executive Officer, Ravinder, ordered
automatic juice-filling and bottling machines to increase speed, improve
hygiene and for consistency in production. Since the investment was huge,
instead of buying all new machinery ‘Freshju’ took some expensive
machines on lease.
They also collaborated with a nearby packaging unit to use their
packing machines during peak-season. This helped ‘Freshju’ to manage
seasonal surges in demand without investing in additional equipment
that would remain underutilized during off season.
Quoting lines from the above, identify and explain any four factors that
will affect the fixed capital requirements of ‘Freshju’.