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ACE AUTOMOTIVE:
The Optimal Dilemma
February 2016

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Outline

ACE AUTOMOTIVE: The Company

McCulloughs Dilemma

The Production Options

The Production Objective

Criteria for Success

Analyzing the Alternatives

The Automotive Industry

Recommendation

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ACE AUTOMOTIVE: The
Company

Ace is a manufacturer and supplier of automotive parts

Ace was acquired in 1987 by Spartan Industries and it

became the fourth division of the company

Ace has a 125,000 square-foot plant in St. peters being

run by Bruce McCullough whom the company was
acquired from

Ace major clientele where the OEM manufacturers and

the dominant domestic automakers.

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McCulloughs Dilemma
Bruce McCullough, being the plant manager at the Missouri plant
was immediately challenged with 2 major decision criteria
Production

He had to make a choice on the best combination of jobs to

collect that will ensure optimal use of the plant and minimize the
risks associated with production and supplies

He also had to make sure he used the right presses for the jobs
to ensure quality and efficiency

Pricing

An even more sensitive dilemma he had was how to ensure he

priced the finished products well enough to win the job whilst
obtaining the maximum margin possible for the sale

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The Production Options

Bruce McCullough had to make a decision with 3

variant options in his mind
1.

Continue the Chrysler contract, bid on the HV6 using the

800/1000-ton presses and forgo Laclede

2.

Keep both the Chrysler and the Laclede contracts and cast
the HV6 on the 800/1000-ton presses while using overtime
and/or outsourcing as necessary

3.

Run both Chrysler and HV6 on the 400/500-ton with

Laclede on the heavy presses (1000)

Objectives

McCullogh had a long term objective to expand the plant and

increase its capacity so he can accommodate more of the
available jobs in the industry and be more competitive
However, on the short term, his Objectives were to
1.

Ensure optimum foundry utilization to minimize cost and

wastages

2.

Optimize profit

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Analyzing the Alternatives

Recommendations

Looking at Profitability, the optimal option is Option 2 with

a net profit of N240,836

The proposed selling price is $15.50

THANK YOU!