Assignment - Toyota Production System
Lexus RX 350, Successor in 2007 to the RX 330 – Together with Toyota, Lexus achieved top ratingfor reliability in Consumer Reports’ 2017 Annual AutoIssue
Photo courtesy of Toyota MotorCompany
Overview
In this assignment, student teams prepare a report to demonstrate their acquired knowledge of the Toyota Production System and of ToyotaMotor Company's North American regional productionstrategy.
A real-world case study underpins one-half of theassignment.
Assignment
Address as a team the following four exercises due the last day of this week in the group assignment folder.
Exercise 1: Making a Critical Assessment of the Toyota ProductionSystem (TPS)Today
- Demonstrate your team's basic understanding of the TPS byDefining in your team's own words any eight of the terms found at
- Applying them to one or more of your team's own companies or other organizations.
For example, Pokayoke is an approach to avoid production mistakesthrough use of devices or processes that detect or prevent errors. At a software development firm, Pokayoke might be applied through use of a modular development process that includes extensive software module testing before proceeding to module integration and then total systemtesting
a.Describe the TPS as a total entity. What are its purposes? Its advantages? Its limitations? How is it now evolving? Is it getting better or not? Has it been successfully copied by other motor vehicle manufacturers, fully or partially? Why or whynot?
b.Include an executivesummary.
Exercise 2: Use of Grid Analysis (Weighted Scoring) to Help Make the North American Plant Location Decision for the RX330
This exercise illustrates how when deciding among two or more competing plant location options, various decision factors (which can typically becharacterizedas exogenous - in the environment external to the company, hence largely outside its control – or asendogenous - internal to the company, therefore largely under its control) can be qualitatively identified, and how these factors canthen be scored, weighted, and summed to obtain an overall score for each competing locationoption.
An example of an exogenous factor is regulations or laws established by the government where the company operates. An example of an endogenous factor is the wages the company elects to pay, where not constrained bylaw.
You will use grid analysis/weighted scoring, another important tool employed byoperations managers, in developing yourrecommendation.
a.List the factors your team considers key to the location decision required in this case: Toyota MotorManufacturing Canada (TMMC): The Lexus RX 330 Line identifying these factors as either exogenousor
endogenous, weighting them using your team's best judgment (stating any relevant assumptions or constraints), and assigning two scores to each factor: one score for production of the Lexus RX 330 at TMMC, and one score for production at a Toyota factory in theUSA. Sumthe weighted scores to obtain an overall number for each of the two locations.
b.Using the scores from your team's weighted scoring model and working with regard to Ringi Sho and Nemawashi, make and support your recommendation for the RX 330 North American plant location – TMMC, or a factory in theUSA.
c.Include an executivesummary.
Exercise 3: Recommending Production Capacity Needed at ToyotaMotor Manufacturing of Canada(TMMC)
Decision trees are another important if challenging world-class operations management method which operations managers should understand andwith which other managers should befamiliar.
This exercise illustrates how through using a decision tree, determination of an "optimal" production capacity option can be made from among several possible capacity options based on the provided probable market demand andexpected costs/payoffs of events that influence theoptions.
Your team must recommend the production capacity needed at TMMC, after considering a decision tree-based solution prepared by the Acme North Carolina operations analysts (hypothetical) who are supporting theteam.
It is spring 2000, and TMMC has indeed just been chosen to produce the new Lexus RX 330 line, with the first vehicles deliverable in 2003. Toyota must now determine the amount of annual production capacity it should build atTMMC.
Toyota's goal is to maximize the profit from the RX 330 line over the five years from 2003-2007. These vehicles will sell for an average of $37,000 and incura mean unit production cost of $28,000 (here, $ = the Canadiandollar).
10,000 units of annual production capacity can be built for $50M (M=million) with additional blocks of 5,000 units of annual capacity each costing $15M. Each block of 5,000 units of capacity will also cost $5M per year to maintain, even if the capacity isunused.
Assume that the number of units actually sold each year will be the lesser ofthe demand and the productioncapacity.
Marketing has provided three estimated demand scenariosfor the vehicle with associated probabilities asfollows:
Demand / 2003 / 2004 / 2005 / 2006 / 2007 / ProbabilityLow / 10,000 / 10,500 / 11,000 / 11,500 / 12,000 / 0.25
Moderate / 15,000 / 16,000 / 17,000 / 18,000 / 19,000 / 0.50
High / 20,000 / 24,000 / 26,000 / 28,000 / 30,000 / 0.25
Here is the decision tree-based solution that the Acme North Carolina operations analysts (hypothetical) who are supporting the team haveprepared:
a.To maximize profit earned during this period, which annual production capacity will your group recommend that TMMC in 2000 decides to build - 10,000, 15,000, 20,000, 25,000, or 30,000 cars? Justify yourchoice.
b.What are the weaknesses or limitations in this analysis? How might they be corrected orreduced?
c.It is now 2017. How well has the RX-330/350 actually done in the North American market? Is its quality rated as high as a Lexus made in Japan? Support yourviews.
d.Include an executivesummary.
Exercise 4: Assessment of Toyota's Current Regional ProductionStrategy
North America (Canada, Mexico,USA)
Source:
a. After doing necessary research online or otherwise, document and evaluate the current and planned distribution of Toyota production facilities in North America. Here be sure to include Mexico. THINK CRITICALLY
b.WhydoestheteambelieveToyotahaschosentoproduceitscarsforthe North American market in the current manner? THINKCRITICALLY
c.Recommend any changes that the team believes appropriate inthe distribution of Toyota production facilities in NorthAmerica.
d.Comment on the relevance and value, if any, to Toyota operations in North America of the North American Free Trade Agreement.
e.Include an executivesummary.
Besides an assessment of Toyota production in North America, thisexercise provides the team an opportunity to think ahead to the strategic international considerations that will be important in DMBA 630.
Required Format:
Your report should be in pdf format and contain about 20 pages in length or less, including an executive summary of about 0.5 page per exercise, all double-spaced (2 pages). Attachments, if any, will not count against the 20 pages or less.