Fuyao Glass:

1) Based on the bill of material costs (that specifies the cost items) in Exhibit 16, determine the % contribution by each cost item to the total cost for the two factories, respectively. For each cost item, if the difference in the % contribution between the two factories is larger than 5%, then discuss the reason(s) for the significant cost difference.

2) Assume that you are a consultant working with Wen Li on cost reduction in both the Tianjin and Moraine factories: If all the potential improvements for each factory (that are identified by Wen Li) are realized , then use the information in Exhibit 16 (on both the cost items and the cost-influencing factors), calculate the revised value for each cost item and the total cost for both factories.

(Hint: You may need to first identify how the improvements are related to the cost-influencing factors, and how does each of these factors influence the individual cost items.)

Project Charter – Improve Phase

1.Out of the three alternative solutions, identify the recommended solution (Kitchen reorganization and possibly eliminating inspector position) and justify it.

2. Develop poka-yokes for the new process.