W6TA. Team Assignment: Planning/Assessing
Production for Toyota North America
Lexus RX 350, Successor in 2007 to the RX 330 – Together with Toyota,
Lexus achieved top rating for reliability in Consumer Reports’ 2016
Annual Auto Issue
Photo courtesy of Toyota Motor Company
Overview
In this assignment, student teams prepare a report to demonstrate their acquired knowledge of the Toyota Production System and of Toyota Motor Company's North American regional production strategy.
A real-world case study underpins one-half of the assignment.
Assignment
Address as a team the following four exercises due as specified in the LEO classroom.
Exercise 1: Making a Critical Assessment of the Toyota Production System (TPS) Today
1.Demonstrate your team's basic understanding of the TPS by Defining in your team's own words any eight of the terms found at and
2.Applying them to one or more of your team's own companies or other organizations.
For example, Pokayokeis an approach to avoid production mistakes through 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 system testing
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 why not?
c. Include an executive summary.
Exercise 2: Use of Grid Analysis (Weighted Scoring) to Help
Make the North American Plant Location Decision for the RX 330
This exercise illustrates how when deciding among two or more competing plant location options, various decision factors (which can typically be characterized as exogenous - in the environment external to the company, hence largely outside its control – or as endogenous - internal to the company, therefore largely under its control) can be qualitatively identified, and how these factors can then be scored, weighted, and summed to obtain an overall score for each competing location option.
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 by law.
You will use grid analysis/weighted scoring, another important tool employed by operations managers, in developing your recommendation.
a.List the factors your team considers key to the Toyota MotorManufacturingCanada (TMMC): The Lexus RX 330 Line North American plant location decision, identifying these factors as either exogenous or 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 the USA. 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 RingiSho and Nemawashi, make and support your recommendation for the RX 330 North American plant location – TMMC, or a factory in the USA.
c.Include an executive summary.
Exercise 3: Recommending Production Capacity Needed at Toyota Motor Manufacturing of Canada (TMMC)
Decision trees are another important if challenging world-class operations management method which operations managers should understand and with which other managers should be familiar.
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 and expected costs/payoffs of events that influence the options.
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 the team.
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 at TMMC.
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 incur a mean unit production cost of $28,000 (here, $ = the Canadian dollar).
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 is unused.
Assume that the number of units actually sold each year will be the lesser of the demand and the production capacity.
Marketing has provided three estimated demand scenarios for the vehicle with associated probabilities as follows:
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 have prepared:
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 your choice.
b.What are the weaknesses or limitations in this analysis? How might they be corrected or reduced?
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 your views.
d.Include an executive summary.
Exercise 4: Assessment of Toyota's Current Regional Production Strategy
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.Why does the team believe Toyota has chosen to produce its cars for the
North American market in the current manner? THINK CRITICALLY
c.Recommend any changes that the team believes appropriate in the distribution of Toyota production facilities in North America.
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 executive summary.
Besides an assessment of Toyota production in North America, this exercise provides the team an opportunity to think ahead to the international politico- socio-economic considerations that will be important in AMBA 660.
Your section professor may amplify your specific taskings in his or her instructions for this assignment.
Required Format:
Use A Format for Our Text Assignments found in Content/General Information.
Required Readings:
•Johnson, W.H.A. (n.d.). Toyota Motor Manufacturing Company Canada (TMMC): The Lexus RX 330 Line. Waltham, MA: Department of Management, Bentley
College.
•Toyota Motor Corporation. (2015). The Toyota production system - terms.
•Mind Tools. (2015). Grid analysis.
•Mind Tools. (2015). Decision tree analysis. Multimedia:
•Knode, C.S. (2011) Decision tree video 1 (setting up the problem): Download Transcript
•Knode, C.S. (2011) Decision tree video 2 (determining the value of perfect information valuation): Download Transcript
•Knode, C.S. (2011) Decision tree video 3 (determining the value of imperfect information valuation):
3. Download Transcript
Additional Readings:
Find them in Content/Week 5 below the Assignment Instructions that you are now reading.
Find them also in Content/Week 4 and /Week 6 where there are several optional readings on Big Data, offshoring, reshoring, next shoring, the Toyota Production System, and NAFTA.
Grading Rubric:
Posted below
Assignment Weighting:
12.5% of the course grade