First Auto Company India How is OTD different from BTS Analysis Paper


How is OTD different from BTS? What are the advantages of OTD from a production planning point of view? Who are the main benefactors of OTD?Suppose that FAC India decides to shelve the OTD plan and continue with the current BTS system. Assume that FAC India currently bears an inventory holding cost of 25% per unit per annum (including interest, rent, cost of obsolescence, etc.). If FAC India’s annual volumes increase tp 150,000 per year with Model-i’s introduction(assume Model-i’s volumes will be 120,000 and remaining models 30,000), what would the cost and managerial implications in terms of finished goods inventory holding? Assume that the average production cost of Model-i is RS 400,000 per unit and other models is Rs 600,000 per unit.Assume that the supply chain team came back with the following information.All the major sub-assemblies require at least 2 months of lead time for material procurement and production planning, except in the instance of the engine and transmission. Since engines are assembled in FAC’s India engine plant which is located next to the assembly line, a 4-week lead time is sufficient for material planning and assembly of the engine and similarly for transmissions. On the other hand, paint is imported in bulk volumes every 6 months. However, mixing of final colors )seven colors totally for Model-i) takes place in FAC’s plant and hence a 10-day notice is sufficient to create the final mix of colors and plan the final sequence of paints.Using this information, design an optimal OTD plan that takes into account supplier lead time requirements and at the same time is less demanding on the dealers than what is portrayed in the case. It is to be noted that your plan should provide a detailed description of how, when, and in what frequency orders should be received by FAC from dealers; how material should flow from tier-1 suppliers to FAC’s assembly plant; for how long the schedule is to be frozen in the assembly plant; and how the finished vehicles should flow from FAC’s assembly plant to the dealers. You should also provide some estimates of how much finished vehicle inventory should be held by FAC and how much by the dealers?

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