Operations Management: Per Mustang Case Study

Resource: Operations Management: Processes and Supply Chains, Ch. 7

Read Case: The Pert Mustang (below).

Write a 1,050- to 1,400-word paper in which you address the following points:

• Prepare the report that Vicky Roberts requested, assuming the project will begin immediately. Assume 45 working days are available to complete the project, including transporting the car to Detroit before the auto show begins.
• Discuss, briefly, the aspects of the proposed new business, such as the competitive priorities that Roberts asked about.
• Create a table containing the project activities used in the letter assigned to each activity, the time estimates, and the precedence relationships from which you will assemble the network diagram.
• Draw a network diagram of the project similar to Figure 7.3.
• Determine the activities on the critical path and the estimated slack for each activity.

CASE: The Pert Mustang

Roberts Auto Sales and Service (RASAS) consists of three car dealerships that sell and service several makes of American and Japanese cars, two auto parts stores, a large body shop and car painting business, and an auto salvage yard. Vicky Roberts, owner of RASAS, went into the car business when she inherited a Ford dealership from her father. She was able to capitalize on her knowledge and experience to build her business into the diversified and successful mini-empire it is today. Her motto, “Sell ‘em today, repair ‘em tomorrow!” reflects a strategy that she refers to in private as “Get ‘em coming and going.”Roberts has always retained a soft spot in her heart for high-performance Mustangs and just acquired a 1965 Shelby Mustang GT 350 that needs a lot of restoration. She also notes the public’s growing interest in the restoration of vintage automobiles. Roberts is thinking of expanding into the vintage car restoration business and needs help in assessing the feasibility of such a move. She wants to restore her 1965 Shelby Mustang to mint condition, or as close to mint condition as possible. If she decides to go into the car restoring business, she can use the Mustang as an exhibit in sales and advertising and take it to auto shows to attract business for the new shop.Roberts believes that many people want the thrill of restoring an old car themselves, but they do not have the time to run down all the old parts. Still, others just want to own a vintage auto because it is different and many of them have plenty of money to pay someone to restore an auto for them.Roberts wants the new business to appeal to both types of people. For the first group, she envisions serving as a parts broker for NOS (“new old stock”), new parts that were manufactured many years ago and are still packaged in their original cartons. It can be a time-consuming process to find the right part. RASAS could also machine new parts to replicate those that are hard to find or that no longer exist.In addition, RASAS could assemble a library of parts and body manuals for old cars to serve as an information resource for do-it-yourself restorers. The do-it-yourselfers could come to RASAS for help in compiling parts lists, and RASAS could acquire the parts for them. For others, RASAS would take charge of the entire restoration.Roberts asked the director of service operations to take a good look at her Mustang and determine what needs to be done to restore it to the condition it was in when it came from the factory more than 40 years ago. She wants to restore this car in time to exhibit it at the Detroit Auto Show. If the car gets a lot of press, it will be a real public relations coup for RASAS—especially if Roberts decides to enter this new venture. Even if she does not, the car will be a showpiece for the rest of the business.Roberts asked the director of service operations to prepare a report about what is involved in restoring the car and whether it can be done in time for the Detroit show in 45 working days using PERT/CPM. The parts manager, the body shop manager, and the chief mechanic have provided the following estimates of times and activities that need to be done, as well as cost estimates:

• a. Order all needed material and parts (upholstery, windshield, carburetor, and oil pump). Time: 2 days. Cost (telephone calls and labor): $100.
• b. Receive upholstery material for seat covers. Cannot be done until order is placed. Time: 30 days. Cost: $2,100.
• c. Receive windshield. Cannot be done until order is placed. Time: 10 days. Cost: $800.
• d. Receive carburetor and oil pump. Cannot be done until order is placed. Time: 7 days. Cost: $1,750.
• e. Remove chrome from body. Can be done immediately. Time: 1 day. Cost: $200.
• f. Remove body (doors, hood, trunk, and fenders) from frame. Cannot be done until chrome is removed. Time: 1 day. Cost: $300.
• g. Have fenders repaired by body shop. Cannot be done until body is removed from frame. Time: 4 days. Cost: $1,000.
• h. Repair doors, trunk, and hood. Cannot be done until body is removed from frame. Time: 6 days. Cost: $1,500.
• i. Pull engine from chassis. Do after body is removed from frame. Time: 1 day. Cost: $200.
• j. Remove rust from frame. Do after the engine has been pulled from the chassis. Time: 3 days. Cost $900.
• k. Regrind engine valves. Do after the engine has been pulled from the chassis. Time: 5 days. Cost: $1,000.
• l. Replace carburetor and oil pump. Do after engine has been pulled from chassis and after carburetor and oil pump have been received. Time: 1 day. Cost: $200.
• m. Rechrome the chrome parts. Chrome must have been removed from the body first. Time: 3 days. Cost: $210.
• n. Reinstall engine. Do after valves are reground and carburetor and oil pump have been installed. Time: 1 day. Cost: $200.
• o. Put doors, hood, and trunk back on frame. The doors, hood, and trunk must have been repaired first. The frame must have had its rust removed first. Time: 1 day. Cost: $240.
• p. Rebuild transmission and replace brakes. Do so after the engine has been reinstalled and the doors, hood, and trunk are back on the frame. Time: 4 days. Cost: $2,000.
• q. Replace windshield. Windshield must have been received. Time: 1 day. Cost: $100.
• r. Put fenders back on. The fenders must have been repaired first, the transmission rebuilt, and the brakes replaced. Time: 1 day. Cost: $100.
• s. Paint car. Cannot be done until the fenders are back on and windshield replaced. Time: 4 days. Cost: $1,700.
• t. Reupholster interior of car. Must have received upholstery material first. Car must have been painted first. Time: 7 days. Cost: $2,400.
• u. Put chrome parts back on. Car must have been painted and chrome parts rechromed first. Time: 1 day. Cost: $100.
• v. Pull car to the Detroit Auto Show. Must have completed reupholstery of interior and have put the chrome parts back on. Time: 2 days. Cost: $1,000.

Roberts wants to limit expenditures on this project to what could be recovered by selling the restored car. She has already spent $50,000 to acquire the car. In addition, she wants a brief report on some of the aspects of the proposed business, such as how it fits in with RASAS’s other businesses and what RASAS’s operations task should be with regard to cost, quality, customer service, and flexibility.In the restoration business there are various categories of restoration. A basic restoration gets the car looking great and running, but a mint-condition restoration puts the car back in original condition—as it was “when it rolled off the line.” When restored cars are resold, a car in mint condition commands a much higher price than one that is just a basic restoration. As cars are restored, they can also be customized. That is, something is put on the car that could not have been on the original. Roberts wants a mint-condition restoration for her Mustang without customization. (The proposed new business would accept any kind of restoration a customer wanted.)The total budget cannot exceed $70,000 including the $50,000 Roberts has already spent. In addition, Roberts cannot spend more than $3,600 in any week given her present financial position. Even though much of the work will be done by Roberts’s own employees, labor and materials costs must be considered. All relevant costs have been included in the cost estimates.