OMD8

CASE PROBLEM 15.5

Hosuki

Hosuki, a small car maker, competes with larger manufacturers by building cars to order. The company has invested heavily in technology and close partnerships with suppliers. Customers enter their orders and choose their options on the company website. Hosuki's ERP system responds with an estimated cost and completion date. After the customer approves the order, Hosuki sets to work.

Quick response for Hosuki is dependent on collaborative manufacturing with its trading partners. A virtual bill of material for a typical car appears below. Notice each item is color-coded to its supplier and indented beneath its parent assembly. Hosuki has full visibility into its suppliers' ERP systems to check on-hand quantities and order progress. These data are essential in quoting accurate due dates. Most of the car's components are purchased. Hosuki makes the car body, assembles major subassemblies, and completes final assembly and testing. The body stamping machine operates eight hours a day; setup times per item and run times per unit are given in the next column.

Since the suppliers produce in high volume, the lead time for an order is the same regardless of the quantity of the order. In contrast, with limited sales volume and limited space, Hosuki assembles its cars in batches of 10. Each assembly process takes half a day.

Hosuki has just received its first corporate order—for 10 midsized vehicles. The customer would like delivery as soon as possible.