Exercise 1: Making a Critical Assessment of the Toyota Production System (TPS) Today

a. Demonstrate your team's basic understanding of the TPS by

1) definingin your team's own words any eight of the terms found

2) applying them to one or more of your team's own companies or other organizations.

For example, Pokayokecan be defined as an approach to avoid production mistakes through use of devices 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 total system testing

b. 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? Why or why not?

Exercise 2: Use of a Grid Analysis (Weighted Scoring Model) 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 endogenous

- internal to the company, therefore largely under its control) can be qualitatively identified, and how these factors can then be weighted 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, another important tool employed by operations managers, to support your recommendation.

a. List the factors your team considers key to the Toyota Motor Manufacturing Canada (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 for production of the Lexus RX 330 at TMMC, and one for production at a Toyota factory in the USA.

b. Using the scores from your team's weighted scoring model and working with regard to RingoSho and Nemawashi,make and support your recommendation for the RX 330 North American plant location - TMMC or a factory in the USA.

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 being presented with a decision tree-based solution prepared by the 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 units 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 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 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 2013. How well has the RX-330/350 actually done in the North American market? Is its quality rated as high as if it were made in Japan?Support your views.