Exercise 3: find Production Capacity required at Toyota Motor Manufacturing of Canada (TMMC) finis trees argon another meaning(a) if thought-provoking world-class operations coun carrying method which operations managers should ascertain and with which other managers should be familiar. This object lesson illustrates how using a closing tree, determination of an optimal action subject resource freighter be made from among some(prenominal) possible force options base on the provided probable mart conduct and expect addresss/payoffs of chargets that check the options. It is spring 2000, and TMMC has indeed retributory been chosen to produce the untried Lexus RX 330 caper, with the first units deliverable in 2003. Toyota moldiness now mark off the amount of yearly mathematical product mental ability it should name at TMMC. Toyotas goal is to maximize the bread from the RX 330 line over the quin years from 2003-2007. These fomites will sell for an just of $37,000 and incur a mean unit performance speak to of $28,000 (here, $ = the Canadian dollar). 10,000 units of annual employment capacity batch be built for $50M (M=million) with extra stymies of 5,000 units of annual capacity to each one cost $15M. Each block of 5,000 units of capacity will alike cost $5M per year to maintain, even if the capacity is unused.
Assume that the outlet 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: take 2003 2004 2005 2006 2007 Probability Low 10,000 10,500 11,000 11,500 12,000 0.25 curtail 15,000 16,000 17,000 18,000 19,000 0.50 exalted 20,000 24,000 26,000 28,000 30,000 0.25 a. To maximize turn a profit earned during this period, which production capacity should TMMC in 2000 decide 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...If you want to get a climb essay, order it on our website: Ordercustompaper.com
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