CASE STUDY

ACE AUTOMATIVE

GROUP 4
 BACKGROUND

Company profile
Ace Automotive is one of the four divisions of Spartan Industries Inc. Is a supplier to the
automotive industry.
Ace was acquired in 1987 from McCullough and ever since agreed to be the president
and the St. Peters plant manager.

Product
Product line include:
• Water pumps
• Oil filter adapters
• Exotic brackets
• Fuel pumps
Executive Summary

 Ace automotives received a Request for Quotation (RFQ) from General Motors (GM)
Chevrolet-Pontiac-Canada (CPC) group to supply water pumps for the High Value -6 (HV6)
engine.
 Another opportunity is a new contract with Laclede Gas Company for large fittings used in
construction projects.
There are existing foundry capacity constraints in the St Peter’s Missouri plant. Ace has 9 Die
casting machines with capacities ranging from 400tons to 1000 tons, out of which 5 are 400/500
ton presses and the remaining are 800/1000 presses.
The capacities in the existing die casting machines, given Ace’s current workload, creates
concerns about our ability to execute new contracts with the available plant capacity.
 GM, has demanded quantities less than what was projected on average. This risk has never
been properly factored into quotations, and Ace would like to confront this issue in quoting for
HV-6.
DECISION PROBLEM & OBJECTIVE

Considering the plant capacity constraints, which contracts will be most favourable for Ace to
pursue in 1992?

What price should be quoted for GM’s HV-6 water pump?

ALTERNATIVES (CONTRACT DECISION)

Continue the Chrysler Contract, Bid on HV6 using 800/1000-ton presses, forgo Laclede

Keep Chrysler and Laclede Contracts, Bid on HV6 using 800/1000-ton presses while using
overtime and/or outsourcing as necessary.

 Run Chrysler and HV6 on 400/500-ton presses, Laclede on 1000 ton presses, and perhaps some
overtime and outsourcing
ALTERNATIVES (HV-6 PUMPS)

Continue the Chrysler Contract, Bid on HV6 using 800/1000-ton presses, forgo Laclede

Keep Chrysler and Laclede Contracts, Bid on HV6 using 800/1000-ton presses

 process Chrysler and HV6 on 400/500-ton press, Laclede on 800/1000-ton presses