What is the most important problem facing the Byte Products, Inc.?

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I am looking for assistance with this assignment. I want to assure that I am on the right track. I just do not seem to grasp the idea of the management concept

Text is from Strategic Management and Business Policy Tenth Edition

Details: Read "The Recalcitrant Director at Byte Products, Inc.: Corporate Legality Versus Corporate Responsibility," Case 1 in your text (pages 1-1 through 1-7, Appendix 15a, page 365). After review, write a 2 to 3 page response to the following questions:

1. What is the most important problem facing the Byte Products, Inc.?

The most important problem facing the Byte products is to match the supply as per the demand of the customers. Their plant is running at full capacity and is unable to match the growing demand of its products. Thus the problem is of improper capacity planning.
Capacity planning is a part of supply chain. "A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations although the complexity of the chain may vary greatly from industry to industry and firm to firm." By Terry Harison.

It is a part of Supply Planning?the objective of the Supply Planning process is to optimally position enterprise resources to meet demand. This is a planning-level sub-process that spans the strategic and tactical supply-planning processes. Long-term planning, inventory planning, distribution planning, collaborative procurement, transportation planning and supply allocation are all part of this sub-process.

Capacity is the work that the system is capable of doing in a period of time.
It must be determined at different levels:
 plant
 department
 work center.
It is normally stated in standard hours of work.
Global Capacity planning involves matching of available capacity to demand or making certain capacity available to meet the demand variation globally.
Thus it is a tool for:
 Determining capacity that is available and required.
 Alleviating bottleneck work centers.
 Helping planner's make the right decisions on scheduling before problems develop.
 Verifies that you have sufficient capacity available to meet the capacity requirements for MRP plans.
Poor planning can mean a company's inability to handle unexpected occurrences. Good planning can place a company in an extremely strong competitive position.

Moreover there is an issue of corporate social responsibility and to satisfy the all the stakeholders of the organization. (Discussed in the third section)

2. What recommendation(s) would you make to Mr. Elliot, and in what order of priorities?

Recommendations:

Proper capacity planning and meeting the demand
Thus first recommendation will be to do capacity planning and taking immediate steps to meet the demand of the ...