The Pert Studebaker Case
The Pert Studebaker. Case Study Case Background From 1916 to 1966, Studebaker automobiles were manufactured in South Bend Indiana. Vicky Roberts became owner of Roberts’s Auto Sales and Service (RASAS) when she inherited a Studebaker dealership. RASAS is a diversified business that includes three sales and service car dealerships, two auto parts stores, a large body shop, a car painting business and an auto salvage yard. Ms. Roberts is considering expanding the business to include vintage car restoration. She has just acquired a 1963 Avanti Studebaker.
She would like to restore the car to mint condition and use the car as advertising for the new business in an upcoming Studebaker meet. The meet is in 45 days. Roberts has a total budget of $7000 and can only spend $1700 a week. Roberts has requested a report outlining the activities involved, while considering, cost and time using PERT/CPM. The report will provide insight into the feasibility of the proposed new business. If all activities are completed on time and within budget, Roberts will be confident that she can successfully undertake this new venture. (Ritzman et al, 2007). Question 1) There is a significant demand for vintage cars in the market. There are people who are interested in restoring their car but don’t have the time or expertise. Some people will be willing to pay a lot of money to have someone else restore the car for them. RASAS will cater to two groups of people. The first type of clientele will visit RASAS to secure the new old stock (NOS), new parts that were manufactured years ago and still in their original packaging. The second group of clientele will rely solely on RASAS to restore their vintage car. (Ritzman et al, 2007).
The restoration of the Avanti to mint condition will not only help in marketing the brand value of RASAS but will also help analyse certain traits of RASAS, which will help in making a decision about entering the car restoration business. A successful restoration will prove that RASAS has the expertise in executing such a project, has the necessary bandwidth, and has the infrastructure in place. The business of restoration would be on a project basis. RASAS would initiate the process of restoration only on request. The proposed car restorations can be divided into three categories.
Basic restorations involve getting the car up and running while a mint condition restoration transforms the car to its original form. A customized restoration includes anything that goes beyond the original form. RASAS envisions working with customers to achieve any kind of restoration they choose. RASAS will also work with customers to provide or acquire parts needed for do-it-yourself restorations. (Ritzman et al, 2007). As RASAS is required to procure parts for restoration, these parts could be ordered in bulk, stocked-up and used to sell to customers who only require parts.
A benefit of holding inventory is that it could help reduce time for procurement of parts. However, this aspect has to be checked in-terms of the amount of inventory RASAS is capable of holding. The cost and time factor analysis would purely depend on the nature of the project. It could vary from just a basic restoration to mint condition restoration. (Question 2) RASAS’s parts manager, body shop manager, and chief mechanic have provided estimates of the time and cost associated with the activities required for the mint condition restoration of the Avanti.
Figures 1 and 2 (Appendix) summarize the activities, time estimates and precedent relationships. Initially a basic solution was achieved for the ordering of activities and budgeting of the project. This basic solution is illustrated in the PERT chart that is shown in Figure 1. Although the basic solution satisfies both cost and time requirements for our project, after further analysis, there proved to be room for improvement. Distributing the slack of the major sub activities, which precede many other activities, would allow for more flexibility. This would accommodate any unforeseen disruptions in our project.
The finalized PERT chart has been presented in Figure 2. (Question 3) Figures 3 and 4 (Appendix) provide Activity on node (AON) diagrams that outline the activities and estimated slack for both scenarios. Figure 3 represents our initial solution while Figure 4 represents our final solution. Our critical path is outlined in red in Figure 4. The critical path will have no slack available. The critical path is comprised of activities A, B, T, and V. Activity A represents the ordering of all materials and parts (upholstery, windshield, carburetor, and oil pump).
Activity B represents the receiving of materials for upholstery covers. Activity T represents reupholstering the interior of the car. Finally, Activity V represents pulling the car into the Studebaker auto show. (Question 4) Figure 5 and 6 (Appendix), outline a project budget with the cost of each activity and the total budget. As can be seen from Figures 5 and 6, both our initial and improved solutions allow for all activities to be completed within the given budget. The entire project cost for restoration of the Avanti was pegged at $ 7000, excluding the cost of the old Avanti.
The challenge was to arrange activities in a way so as not to exceed a weekly budget of $ 1700. Besides cost, time was also critical as the deadline to complete the project was 45 days. Though, there were weeks where the budget exceeded $ 1700, with adjustment of some activities without disturbing their flow, the budget was managed. Figure 6 outlines the activities planned per week and the associated weekly cost. RASAS is well within the budget allocated and faces no cash-flow issues for completion of the project Bibliography & References Ritzman, L. P. , Krajewski, L. J. , Malhotra,M. K. and Klassen, R. D. Foundations of Operations Management (2nd Canadian Edition) APPENDIX Figure 1 [pic] Figure 2 [pic] Figure 3 [pic] Figure 4 [pic] Figure 5 |Week 1 |$1,560. 00 | |Week 2 |$930. 00 | |Week 3 |$920. 00 | |Week 4 |$60. 00 | |Week 5 |$1,700. 00 | |Week 6 |$50. 00 | |Week 7 |$1,200. 00 | |Week 8 |$500. 00 | [pic] Figure 6 [pic] [pic]