Lexus RX 350, Successor in 2007 to the RX 330
Photo courtesy of Toyota Motor Company
As part of a team, address Part 1 a and b of the following four exercises.
Exercise 1: Making a Critical Assessment of the Toyota Production System (TPS) Today
a. Demonstrate your basic understanding of the TPS by 1) defining in your own words any eight of the terms found at http://www.toyotageorgetown.com/terms.asp, and 2) applying them to one or more of your own companies or other organizations.
For example, Pokayoke can be defined as an approach to avoid production mistakes through use of devices that detect or prevent errors. At a software development …show more content…
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 vehicle estimated demand scenarios with associated probabilities as follows: Demand | 2003 | 2004 | 2005 | 2006 | 2007 | Probability | Low | 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 has been prepared by the operations analysts (hypothetical) who are supporting the team:
a. To maximize profit earned during this period, which production capacity will you recommend that TMMC in 2000 decides to build - 10,000, 15,000, 20,000, 25,000, or 30,000