Question

Ayota Car Company produces a car that sells in Japan for ¥1.8 million. On September 1, the beginning of the model year, the exchange rate is ¥150:$1. Consequently, Ayota sets the U.S. sticker price at $22,000.

Suggest two production strategies for Ayota to improve its situation?

Answer 1

Ayota car company which sells its car for ¥1.8 million in Japan, has put a nice sticker price for selling it in US. Why I say this is because if we simply translate the rate in ¥ to rate in $, at the exchange rate on September 1, it comes to $12,000. What it can do to improve its situation is illustrated below:

1. Committed production unit: Setting up a committed production unit can prove to be a boon for this kind of business model. It will help it to lessen the production cycle time and save money. This can be achieved by using dedicated production units and well-organized storage for parts. Unit should be so structured that everything workers need is there in their work area. Each production unit should be arranged so that the production process runs from start to finish. Also, all the ancilliary units should be in close vicinity.

2.  Creating a culture of quality and using technology to connect the supply chain: This is another production strategy which Ayota can adopt to improve its situation.