Deck 14: Operations, Quality, and Productivity Endnotes Index

Question 1

Objective
To develop your skill at calculating EOQ.
Skills
The primary skills developed through this exercise are:
1. Management skill - decision making
2. AACSB competency - analytic
3. Management function - controlling
Calculate the EOQ for each of the following four situations:
_________ 1. R 5 2,000, S 5 $15.00, H 5 $5.00
_________ 2. H 5 $10.00, R 5 7,500, S 5 $40.00
_________ 3. R 5 500, H 5 $15.00, S 5 $35.00
_________ 4. S 5 $50.00, H 5 $25.00, R 5 19,000
Apply It
What did I learn from this experience? How will I use this knowledge in the future?
________________________________
________________________________

Answer 1

The formula for Economic order quantity (EOQ) is:
Where R is total required over planning horizon, S is cost of preparing one order and H is cost of holding one unit for the planning horizon.
1. Economic order quantity (EOQ) is calculated as:
2. Economic order quantity (EOQ) is calculated as:
3. Economic order quantity (EOQ) is calculated as:
4. Economic order quantity (EOQ) is calculated as:
I learned from this experience that Economic order quantity (EOQ) is the optimal quantity of a product to be ordered. The more often we order, the higher will be ordering cost, but we order less, then our holding cost will go up.
I will apply this knowledge in future by using this mathematical model as we can minimize ordering and holding costs without running out of stock.

Question 2

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ The balanced scorecard is not really needed in automobile manufacturing.

A) true
B) False

Answer 2

The answer is (b) False
This is absolutely false that balanced scorecard is not needed in automobile manufacturing.
The balanced scorecard measures financial, customer service, and internal business performance as well as learning and growth performance.
It is required over here as well as it will also focus on all the four dimensions which are equally important in the automobile manufacturing.

Question 3

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Is the trend toward broader product mix with unrelated diversification? Why or why not?

Answer 3

The product mix includes the number of product lines, the number of products offered within each line, and the mixture of goods and services within each line. However, there is trend toward broader product mix but not with unrelated diversification rather it is with related diversification. Nowadays companies believe in diversification but their products are inter-related.
For example Apple expanded its product mix to diversify into mobile devices to include the iPod, iPhone and iPad. No doubt there are some companies with unrelated diversification like Reliance doing business in oil and gas, mobile phones, consumer goods store like soaps, yet there is a more trend toward related diversification.

Question 4

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Discuss the ethical issues surrounding this case.

Question 5

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ Based on their level of flexibility, Toyota's operations are classified as _______ process operations.

A) continuous
B) repetitive
C) batch
D) individual
E) project

Question 6

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Where in the decision-making process might Toyota have erred when they decided to cut vehicle production costs?

Question 7

Objective
To gain experience in determining ways to increase productivity
Skills
The primary skills developed through this exercise are:
1. Management skill - decision making
2. AACSB competency - analytic
3. Management function - controlling
1. Select a place where you work or have worked. Identify the few critical success factors that were/are important for your job/department success.
________________________________
________________________________
2. Determine ways to cut input costs but maintain outputs in order to increase productivity. Identify ways to save time and money. How can things be done cheaper?
________________________________
________________________________
3. Determine ways to increase outputs but maintain inputs in order to increase productivity. What can be done to produce more? How can things be done quicker and better?
________________________________
________________________________
Apply It
What did I learn from this experience? How will I use this knowledge in the future?
________________________________
________________________________

Question 8

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Discuss whether or not Toyota's cost-cutting tactics fit their competitive strategy.

Question 9

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Think about your career and the ideal job you are planning to obtain. Use Exhibit 14-2 to classify the operations systems and Exhibit 14-4 to identify the facility layout where you will work

Question 10

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
How would you rate Toyota's ability to change through innovation, and what type of changes have they been making?

Question 11

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ Based on the resources they require, Toyota's operations are classified as _______.

A) capital-intensive
B) labor-intensive
C) balanced in intensity

Question 12

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Discuss why negotiation skills are so important at Toyota.

Question 13

Objective
To review your course Self-Assessments.
Skills
The primary skills developed through this exercise are:
1. Management skill - decision making
2. AACSB competency - reflective thinking
3. Management function - controlling
Break into groups and discuss your answers to the Self- Assessment, Putting It All Together. Focus on helping each other improve career development plans.
Apply It
What did I learn from this experience? How will I use this knowledge in the future?
________________________________
________________________________

Question 14

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Discuss the importance of motivation and leadership at Toyota

Question 15

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Assume you are planning a major event or project, such as a big wedding. (If you have an actual future event or project, use it rather than selecting an assumed event.) Would you use the planning sheet, Gantt chart, or PERT to plan and control the event? Why? Identify the major things that you need to plan for and make, and put them on the actual form using either Exhibit 14-5, 14-6, or 14-7 as a guide

Question 16

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Discuss the need for a team approach at Toyota.

Question 17

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Toyota's inventory is primarily _______ inventory.

A) raw material
B) work-in-process
C) finished goods
D) in-transit

Question 18

Objective
To review your course learning, critical thinking, and skill development.
Skills
The primary skills developed through this exercise are:
1. Management skill - decision making
2. AACSB competency - reflective thinking
3. Management function - controlling
Think about and write/type the three or four most important things you learned or skills you developed through this course and how they are or will help you in your personal and/or professional lives.
Apply It
What did I learn from this experience? How will I use this knowledge in the future?
________________________________
________________________________

Question 19

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Many companies are now using radio-frequency identification (RFID) technology. RFID is revolutionary and is helping businesses improve supply chain management. However, critics are concerned about protecting people's privacy. For example, with RFID, businesses will better know consumers' shopping habits and purchases. Do you want businesses to know where you live and the products you have in your house? Explain

Question 20

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Why are some companies (such as Apple) innovative when it comes to changing products and processes, while others (such as Eastman Kodak) are slow to innovate and change?

Question 21

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
Inventory and quality control needs to include Toyota's suppliers.

A) true
B) false

Question 22

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ Automobiles produced by Toyota are classified as _______ products.

A) tangible
B) intangible
C) mixed

Question 23

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
What is your view of the quality of products you have purchased over the past year compared to previous years? Did you have to return and exchange products or have them repaired? Do you think that quality is getting better with time?

Question 24

Objective
To develop your skills in planning using a Gantt chart and PERT network.
Skills
The primary skills developed through this exercise are:
1. Management skill - decision making
2. AACSB competency - analytic
3. Management function - controlling
You have decided to open and manage Smith (your last name) Movies Music Shop on April 1. It is now late December. You plan to move in one month before the store opens in order to set up. During March, your assistant will help you set up while you train him or her. Assume that you have decided to use (1) a Gantt chart and (2) a PERT network. Develop both, in whichever order you prefer, following the text guides for their development. Assume that you have identified the activities and completion times listed below (the activities may not be given in sequence) and that you will start to implement the plan on January 2.
a. Lease the fixtures necessary to display your DVDs and CDs; it will take two weeks to get them.
b. Order and receive DVDs and CDs. This will take one week.
c. Recruit and select an assistant (three weeks or less).
d. Install the fixtures, paint, decorate, and so on (two weeks).
e. Form a corporation (four weeks).
f. Make arrangements to buy DVDs and CDs on credit(two weeks).
g. Find a store location (six weeks or less).
h. Unpack and display the DVDs and CDs (one week).
i. Train the assistant (one week).
j. Select the DVDs and CDs you plan to stock (one week).
k. Determine start-up costs and cash outflows per month through April 30; your rich uncle will lend you this amount (one week).
Gantt Chart
When developing the Gantt chart, use the following format, based on weeks. You may want to change the letter sequence to match the starting dates.

PERT
When developing the PERT chart, draw arrows from the start to your circles for the independent activities. Place the letter of the activity inside the circle. On the arrow to the activity, place the number of weeks needed to complete it. Then draw an arrow to the end. Also from the start, draw the first dependent activity, followed by the next dependent activity, and so on, until you get to the last one; then draw an arrow to the end. Be sure to put the number of weeks and activity/event letters on your network. After all activities have been listed, determine the critical path and draw the second arrow to indicate it. Hint: You should have five arrows to activities coming from the start; you can begin the process with either selecting movies/music or finding a store location.

Conclusion
Apply It
What did I learn from this experience? How can I use this knowledge in the future?
_____________________________________
_____________________________________
_____________________________________

Question 25

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ Which of the four major principles of TQM most apply to this case?

A) Focus on delivering customer value
B) Continually improve systems and processes
C) Focus on managing processes rather than people
D) Use teams to continually improve

Question 26

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
Can a standard make-to-stock product (such as soda) also be made-to-order? If so, how?

Question 27

The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions.
The balanced scorecard (BSC) calls for measuring performance in four areas. If a business is making good profits, should it bother with the other three nonfinancing measures? Why or why not?

Question 28

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ Based on their level of customer involvement, Toyota's operations are classified primarily as _______ operations.

A) make-to-stock
B) make-to-order
C) assemble-to-order

Question 29

Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system.
The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.
In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect.
In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company.
However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record $48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company.
As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.
_______ According to the case, which of the following profitability ratios is most relevant to Toyota?

A) gross profit margin
B) net profit margin
C) return on investment