Ace Automotive Case Solution

Considering the fast paced emergence of the automotive sector, competition has tightened along with new players emerging resulting in a reduction in the price level and improvement in the quality in view to gain a greater market share in the industry along with attracting a larger chunk of the customers. In order to cater to such changes, the firms are downsizing the workforce. Ace Automotive is given with three projects each from General Motors, Laclede and Chrysler. All of the three contracts are of high volumes, though each of the decision the firm takes has its own share of pros and cons in regards to the production and management. 

2. Analysis

The die casting machines at the St. Peters Plant have an operating capacity of 400 to 1000 tons. The availability of machines is 36000 hours per year. The operational hours as required in order to complete the three orders exceed the hours available. The organization required an optimized plan in order to reach out to the best decision. Each contract tends to be different from the other one. Each of the order incorporates a complete dissimilar press in order to estimate effectively as to maximize the profit margin. Therefore, fulfilling the needs of the customers would require overtime hours. As the demand by General Motors received is for 140,000 units on the 800/1000 ton presses while the hours calculated are 2870. The management suggested that order can be processed through incorporating 4 cavity dies with 800/1000 Presses. Nevertheless, the order can also be processed under two cavity dies, however, tend to suffer overhead as well as the cost of labor. Furthermore, besides overtime, outsourcing is one of the alternatives for Ace, however, due to variant operational hours requirement in each contract, the cost of outsourcing will be diverse.