MANAGEMENT SCIENCE - CASE STUDY QUESTIONS Ford Motor Company is an American multinational automobile manufacturer headquartered in Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated on June 16, 1903. The company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln luxury brand. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom and a 32% stake in Jiangling Motors. It also has joint-ventures in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand), Turkey (Ford Otosan), and Russia (Ford Sollers). The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines; by 1914, these methods were known around the world as Fordism. Ford's former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000 respectively, were sold to the Indian automaker Tata Motors in March 2008. Ford owned the Swedish automaker Volvo from 1999 to 2010. In 2011, Ford discontinued the Mercury brand, under which it had marketed entry-level luxury cars in the United States, Canada, Mexico, and the Middle East since 1938. Ford sports cars have been visible in the world of sports car racing since 1964. Most notably the GT40 won the 24 Hours of Le Mans four times in the 1960s and is the only American car to ever win overall at this prestigious event. Ford also won the 1968 International Championship for Makes with the GT40. Swiss team Matech GT Racing, in collaboration with Ford Racing, opened a new chapter with the Ford GT, winning the Teams title in the 2008 FIA GT3 European Championship. The Ford Mustang has arguably been Ford's most successful sports car. Jerry Titus won the 1965 SCCA Pro B National Championship with a Mustang and the model went on to earn Ford the SCCA Trans-Am Championship title in both 1966 and 1967. Ford won the Trans-Am Championship again in 1970 with Parnelli Jones and George Follmer driving Boss 302 Mustangs for Bud Moore Engineering. Ford took the 1985 and 1986 IMSA GTO Championship with Mustangs driven by John Jones and Scott Pruett before returning to Trans-Am glory with a championship in 1989 with Dorsey Schroeder. Ford dominated Trans-Am in the 1990s with Tommy Kendall winning championships in 1993, 1995, 1996, and 1997 with Paul Gentilozzi adding yet another title in 1999. In 2005 the Ford Mustang FR500C took the championship in the Rolex Koni Challenge Series in its first year on the circuit. In 2007, Ford added a victory in the GT4 European Championship. 2008 was the first year of the Mustang Challenge for the Miller Cup, a series that pits a full field of identical factory-built Ford Mustang race cars against each other. Also, in 2008, Ford won the manufacturers championship in the Koni Challenge Series and HyperSport drivers Joe Foster and Steve Maxwell won the drivers title in a Mustang GT. A GT racing version of the Ford Mustang, competing in the Koni Challenge in 2005 The Ford Mustang-GT is a new custom-designed Ford racing sports car. An analysis of the task of building the Ford Mustang-GT reveals the following list of relevant activities in table 1 with their immediate predecessors, and their duration. a Immediate Predecessor Normal Time(days) 0 8 A OA Www B B B 0.1 1 1 D B 1 2 Table 1: Task and duration Job Letter Description A Start B Design Order Special accessories D Build Frame E Build doors Attach axles, F wheels, gas tank G Build body shell Build Transmission H and drivetrain I Fit doors to body shell J Build engine K Bench-test engine L Assemble chassis M Road-test chassis N Paint body O Install wiring P Install interior Accept delivery of Q special accessories Mount body and accessories on chassis R S Road test car T Attach exterior trim U Finish B GE B J F,H,K L I N N 3 1 4 2 1 0.5 2 1 1.5 5 MO,P,Q R S T 1 0.5 1 0 Ford had manufacturing operations worldwide, including in the United States, Canada, Mexico, China, India, the United Kingdom, Germany, Turkey, Brazil, Argentina, Australia, and South Africa. Ford also has a cooperative agreement with Russian automaker GAZ. Currently in United States, Ford motor company has two plants for sport cars which are located in Atlanta and Tulsa. Basically, plants in Atlanta will normally produce 600 units at a production cost of $46,000 per unit, while in Tulsa the production will be 900 units at a production cost of $45,000 per unit. Meanwhile, the distribution cost from Atlanta to los Angeles is $80 and distribution cost to New York is $50 and Tulsa to Los Angeles is $40, Tulsa to New York is $70. Presently, Ford motor company maintains plants in Atlanta and Tulsa to supply demand to distribution center in Los Angeles and New York. Because of expending demand, ford company has decided to open a third plant and has narrowed that choice to one of two cities which is New Orleans and Houston. Table 2 provide pertinent production and distribution costs for new proposed plants in New Orleans and Houston Table 2: Production and distribution cost Plants Distribution Centers Production Unit Los Angeles New Production York Cost New Orleans $50 $60 500 $44,000 Houston $40 $60 500 $43,000 The forecast demand for each distribution center is 800 units in Los Angeles and 1200 units in New York. Figure 1 shows the road maps for Ford Auto Company plants in New Orleans and Houston and distribution centers in Los Angeles and New York. Portland Minneapolis Chicago New York Washington Denver San Francisco Los Angeles San Diego Dallas New Orleans 0 250 500 1.000 1,500 2.000 km Figure 1: New Orleans to New York Road Maps However, due to several issues, Ford motor company is considering on opening a new plant in Malaysia, a country with much less stringent environmental laws that the U.S., its home nation. Ford company can save $18 million in building the manufacturing facility and boost its profits it does not install pollution-control equipment that is manded in the U.S. but not in Malaysia. But Ford Auto Company also calculates that pollutants emitted from the plant, if uncurbed, could damage the local fishing industry. This could cause a loss of millions of dollars in income as create health problems for local inhabitants. Ford Motor Company announced it will accelerate its plans to produce more fuel- efficient cars, changing both its North American manufacturing plans and its lineup of vehicles available in the United States. In terms of North American manufacturing, the company will convert three existing truck and sport utility vehicle (SUV) plants for small car production, with the first conversion at its Michigan Truck Plant. In addition, Ford's assembly plants near Mexico City, Mexico, and in Louisville, Kentucky, will convert from pickups and SUVs to small cars, including the Ford Fiesta, by 2011. Based on the cases above, a. by using the decision tree approach, help Ford Auto Company to evaluate their decision making to build a new plant in Malaysia. (16 marks) a MANAGEMENT SCIENCE - CASE STUDY QUESTIONS Ford Motor Company is an American multinational automobile manufacturer headquartered in Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated on June 16, 1903. The company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln luxury brand. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom and a 32% stake in Jiangling Motors. It also has joint-ventures in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand), Turkey (Ford Otosan), and Russia (Ford Sollers). The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines; by 1914, these methods were known around the world as Fordism. Ford's former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000 respectively, were sold to the Indian automaker Tata Motors in March 2008. Ford owned the Swedish automaker Volvo from 1999 to 2010. In 2011, Ford discontinued the Mercury brand, under which it had marketed entry-level luxury cars in the United States, Canada, Mexico, and the Middle East since 1938. Ford sports cars have been visible in the world of sports car racing since 1964. Most notably the GT40 won the 24 Hours of Le Mans four times in the 1960s and is the only American car to ever win overall at this prestigious event. Ford also won the 1968 International Championship for Makes with the GT40. Swiss team Matech GT Racing, in collaboration with Ford Racing, opened a new chapter with the Ford GT, winning the Teams title in the 2008 FIA GT3 European Championship. The Ford Mustang has arguably been Ford's most successful sports car. Jerry Titus won the 1965 SCCA Pro B National Championship with a Mustang and the model went on to earn Ford the SCCA Trans-Am Championship title in both 1966 and 1967. Ford won the Trans-Am Championship again in 1970 with Parnelli Jones and George Follmer driving Boss 302 Mustangs for Bud Moore Engineering. Ford took the 1985 and 1986 IMSA GTO Championship with Mustangs driven by John Jones and Scott Pruett before returning to Trans-Am glory with a championship in 1989 with Dorsey Schroeder. Ford dominated Trans-Am in the 1990s with Tommy Kendall winning championships in 1993, 1995, 1996, and 1997 with Paul Gentilozzi adding yet another title in 1999. In 2005 the Ford Mustang FR500C took the championship in the Rolex Koni Challenge Series in its first year on the circuit. In 2007, Ford added a victory in the GT4 European Championship. 2008 was the first year of the Mustang Challenge for the Miller Cup, a series that pits a full field of identical factory-built Ford Mustang race cars against each other. Also, in 2008, Ford won the manufacturers championship in the Koni Challenge Series and HyperSport drivers Joe Foster and Steve Maxwell won the drivers title in a Mustang GT. A GT racing version of the Ford Mustang, competing in the Koni Challenge in 2005 The Ford Mustang-GT is a new custom-designed Ford racing sports car. An analysis of the task of building the Ford Mustang-GT reveals the following list of relevant activities in table 1 with their immediate predecessors, and their duration. a Immediate Predecessor Normal Time(days) 0 8 A OA Www B B B 0.1 1 1 D B 1 2 Table 1: Task and duration Job Letter Description A Start B Design Order Special accessories D Build Frame E Build doors Attach axles, F wheels, gas tank G Build body shell Build Transmission H and drivetrain I Fit doors to body shell J Build engine K Bench-test engine L Assemble chassis M Road-test chassis N Paint body O Install wiring P Install interior Accept delivery of Q special accessories Mount body and accessories on chassis R S Road test car T Attach exterior trim U Finish B GE B J F,H,K L I N N 3 1 4 2 1 0.5 2 1 1.5 5 MO,P,Q R S T 1 0.5 1 0 Ford had manufacturing operations worldwide, including in the United States, Canada, Mexico, China, India, the United Kingdom, Germany, Turkey, Brazil, Argentina, Australia, and South Africa. Ford also has a cooperative agreement with Russian automaker GAZ. Currently in United States, Ford motor company has two plants for sport cars which are located in Atlanta and Tulsa. Basically, plants in Atlanta will normally produce 600 units at a production cost of $46,000 per unit, while in Tulsa the production will be 900 units at a production cost of $45,000 per unit. Meanwhile, the distribution cost from Atlanta to los Angeles is $80 and distribution cost to New York is $50 and Tulsa to Los Angeles is $40, Tulsa to New York is $70. Presently, Ford motor company maintains plants in Atlanta and Tulsa to supply demand to distribution center in Los Angeles and New York. Because of expending demand, ford company has decided to open a third plant and has narrowed that choice to one of two cities which is New Orleans and Houston. Table 2 provide pertinent production and distribution costs for new proposed plants in New Orleans and Houston Table 2: Production and distribution cost Plants Distribution Centers Production Unit Los Angeles New Production York Cost New Orleans $50 $60 500 $44,000 Houston $40 $60 500 $43,000 The forecast demand for each distribution center is 800 units in Los Angeles and 1200 units in New York. Figure 1 shows the road maps for Ford Auto Company plants in New Orleans and Houston and distribution centers in Los Angeles and New York. Portland Minneapolis Chicago New York Washington Denver San Francisco Los Angeles San Diego Dallas New Orleans 0 250 500 1.000 1,500 2.000 km Figure 1: New Orleans to New York Road Maps However, due to several issues, Ford motor company is considering on opening a new plant in Malaysia, a country with much less stringent environmental laws that the U.S., its home nation. Ford company can save $18 million in building the manufacturing facility and boost its profits it does not install pollution-control equipment that is manded in the U.S. but not in Malaysia. But Ford Auto Company also calculates that pollutants emitted from the plant, if uncurbed, could damage the local fishing industry. This could cause a loss of millions of dollars in income as create health problems for local inhabitants. Ford Motor Company announced it will accelerate its plans to produce more fuel- efficient cars, changing both its North American manufacturing plans and its lineup of vehicles available in the United States. In terms of North American manufacturing, the company will convert three existing truck and sport utility vehicle (SUV) plants for small car production, with the first conversion at its Michigan Truck Plant. In addition, Ford's assembly plants near Mexico City, Mexico, and in Louisville, Kentucky, will convert from pickups and SUVs to small cars, including the Ford Fiesta, by 2011. Based on the cases above, a. by using the decision tree approach, help Ford Auto Company to evaluate their decision making to build a new plant in Malaysia. (16 marks) a