1 Question 1: Chevrolet is producing four models in its facilities in US: Impala, Malibu, Volt, and Camaro. It is estimated that demand for each car model in 2023 will be 300,000, 350,000 or 400,000 units, with probabilities 2/5, 1/5, and 2/5, respectively. The company currently has 4 assembly plants: Oshawa (Impala), Kansas City (Malibu), Detroit (Volt), and Lansing (Camaro) each dedicated to one particular model. a) The company decides to establish 350,000 units of capacity in each plant prior to 2020 and has no chance to change that within the year. What is the expected total sales for Chevrolet in 2023? b) If the company can adopt a complete flexibility configuration and still establishes 350,000 units of capacity in each assembly line prior to 2023, what is the expected total sales for Chevrolet in 2023? c) It turns out that a complete flexibility configuration can be very costly. Chevrolet is interested in a limited flexibility configuration such that each model can be produced in one other line. Chevrolet decided to invest in plants such that Oshawa can also produce Malibu, Kansas City can also produce Impala, Detroit can also produce Camaro, Lansing can also produce Volt. What is the expected total sales for Chevrolet in 2023, if it uses this configuration? (Assume again that the capacity of each plant is 350,000). d) Is there a better limited flexibility configuration that you can recommend to Chevrolet? What is it? What is the expected total sales for Chevrolet in 2023, if it uses this configuration? (Assume again that the capacity of each plant is 350,000). 1 Question 1: Chevrolet is producing four models in its facilities in US: Impala, Malibu, Volt, and Camaro. It is estimated that demand for each car model in 2023 will be 300,000, 350,000 or 400,000 units, with probabilities 2/5, 1/5, and 2/5, respectively. The company currently has 4 assembly plants: Oshawa (Impala), Kansas City (Malibu), Detroit (Volt), and Lansing (Camaro) each dedicated to one particular model. a) The company decides to establish 350,000 units of capacity in each plant prior to 2020 and has no chance to change that within the year. What is the expected total sales for Chevrolet in 2023? b) If the company can adopt a complete flexibility configuration and still establishes 350,000 units of capacity in each assembly line prior to 2023, what is the expected total sales for Chevrolet in 2023? c) It turns out that a complete flexibility configuration can be very costly. Chevrolet is interested in a limited flexibility configuration such that each model can be produced in one other line. Chevrolet decided to invest in plants such that Oshawa can also produce Malibu, Kansas City can also produce Impala, Detroit can also produce Camaro, Lansing can also produce Volt. What is the expected total sales for Chevrolet in 2023, if it uses this configuration? (Assume again that the capacity of each plant is 350,000). d) Is there a better limited flexibility configuration that you can recommend to Chevrolet? What is it? What is the expected total sales for Chevrolet in 2023, if it uses this configuration? (Assume again that the capacity of each plant is 350,000)
