Roche: The Investment Decision Dilemma
In 2015, Roche launched an internal improvement program aimed at reducing the cost of its products, with the emphasis on manufacturing costs. Paul de Wit, the group head in charge of product supply-chain management, was assigned the task of figuring out the appropriate production batch size for each product, with the help of two representatives from the financial and supply-chain management departments. They tested three different approaches on a representative product, with the intention of scaling up their chosen methodology once the appropriateness of their estimation had been validated. However, De Wit was shocked to find that the results provided by the three methods differed greatly from each other.