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# Application of operations management techniques

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Exercise 4: Use of Basic Probabilities in the Context of Toyota North American Operations and Assessment of Toyota's Regional Strategy This exercise illustrates how basic probability concepts can be relevant in "real world" business contexts (that of Toyota's North American manufacturing, in this case) and invites your evaluation of the company's regional strategy for North America.
The report Using the data available in this report, answer the following questions:

a) Given that a Corolla (selected at random) was produced in 2007 in North America, what is the probability that it was produced at TMMC?

http://polaris.umuc.edu/~jstewart/Amba604/Toyota_NA_production_2007.pdf has information about the production volumes of the various Toyota North American Manufacturing locations for 2007. It is based on information released by the company.
In addition to production data, one reads evidence of completed projects and facts about Toyota's organization in North America.

b) Given that a Lexus RX 350 was produced in 2007 in North America, what is the probability that it was produced at TMMC? Recall that the RX 350 is the successor to the RX 330. (Does your answer shed any light on whether or not Greig was successful in his bid for production at TMMC?)

c) Given that a randomly selected Toyota (any "Toyota" vehicle, including Lexus) was produced in 2007 in North America, what is the probability that it was produced either at TMMC or TMMK?

d) Based on the foregoing and events such as Toyota's decision to build another manufacturing plant in Ontario, what is your general view about the wisdom of the current distribution of Toyota production in North America? Here be sure to include Mexico. Finally, in your considered opinion, why has Toyota chosen to produce its cars in the current manner?

#### Solution Preview

See the attached file. Hope this will help.
Part a)
The Corolla was produced at following centers in 2007:
Manufacturing Site # Units
TMMK 0
NUMMI 200,194
TMMC 159,297
TMMI 0
TMMBC 0
TMMTX 0
SIA 0
Total 359491

P(TMMC/Corolla) = P(Corolla & TMMC)/P(Corolla) = 159297/359491=0.443118187

Thus, a large percentage of corrolla are manufactured in TMCC. Therefore, it is highly likely that if you are purchasing a Corolla, it might have been manufactured in Canada.

Part b)
The production of Lexus RX 350 in 2007 was as follows:
Manufacturing Site # Units
TMMK 0
NUMMI 0
TMMC 78074
TMMI ...

#### Solution Summary

The solution examines the application of operations management techniques.

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