Case 8 Ford Pinto Gm Mallibu Assignment3
Assignment 3: Case 8.9
Ford and Its Pinto and GM and its Mallibu: The repeating exploding gas tank problem.
1. Calculate the total cost of all the fixes for the pinto gas tank problem has been performed.
Design changes that could have been done by Ford include
Side and cross members at $2.40 and $1.80 per car respectively, a shock-absorbent “flak suit” to protect the tank at $4; a tank within a tank and placement of the tank over the axle at $5.08 to $5.79; a nylon bladder within the tank at $5.25 to $8;placement of the tank over the axle surrounded with a protective barrier at $9.59 per car; imposition of a protective shield between the differential housing and the tank at $2.35;improvement and reinforcement of the bumper at $2.60;and addition of eight inches of crush space at a cost of $6.40.
Ford came up with the estimated cost for the production change with $11 per vehicle. This $11 per unit cost applied to 11 million cars and 1.5 million trucks results in an overall cost of $137 million.
Costs:
Sales: 11 million cars,1.5 million trucks
Unit cost: $11 per car,$11 per truck
Total Cost: (11,000,000 *$11) + (1,500,00*$11)= $137 million.
2. What was management’s position on the fixes?
Ford engineers estimated the cost of technical improvements that would prevent gas tanks from leaking in rollover accidents to be $11 per vehicle. This $11 per unit cost applied to 11 million cars and 1.5 million trucks results in an overall cost of $137 million.
It was estimated that making the change would result in a total of 180 less burn deaths, 180 less serious burn injuries, and 2,100 less burned vehicles
Benefits
Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles
Unit cost: $200,000 per death, $67,000 per injury, $700 per vehicle
Total benefit: (180 X $200,000) + (180 X $67,000) + (2,100 X $700) = $49.5 million.
Ford felt justified in its decision not to alter the product design. The risk, /benefit results indicate that it is acceptable for 180
Ford and Its Pinto and GM and its Mallibu: The repeating exploding gas tank problem.
1. Calculate the total cost of all the fixes for the pinto gas tank problem has been performed.
Design changes that could have been done by Ford include
Side and cross members at $2.40 and $1.80 per car respectively, a shock-absorbent “flak suit” to protect the tank at $4; a tank within a tank and placement of the tank over the axle at $5.08 to $5.79; a nylon bladder within the tank at $5.25 to $8;placement of the tank over the axle surrounded with a protective barrier at $9.59 per car; imposition of a protective shield between the differential housing and the tank at $2.35;improvement and reinforcement of the bumper at $2.60;and addition of eight inches of crush space at a cost of $6.40.
Ford came up with the estimated cost for the production change with $11 per vehicle. This $11 per unit cost applied to 11 million cars and 1.5 million trucks results in an overall cost of $137 million.
Costs:
Sales: 11 million cars,1.5 million trucks
Unit cost: $11 per car,$11 per truck
Total Cost: (11,000,000 *$11) + (1,500,00*$11)= $137 million.
2. What was management’s position on the fixes?
Ford engineers estimated the cost of technical improvements that would prevent gas tanks from leaking in rollover accidents to be $11 per vehicle. This $11 per unit cost applied to 11 million cars and 1.5 million trucks results in an overall cost of $137 million.
It was estimated that making the change would result in a total of 180 less burn deaths, 180 less serious burn injuries, and 2,100 less burned vehicles
Benefits
Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles
Unit cost: $200,000 per death, $67,000 per injury, $700 per vehicle
Total benefit: (180 X $200,000) + (180 X $67,000) + (2,100 X $700) = $49.5 million.
Ford felt justified in its decision not to alter the product design. The risk, /benefit results indicate that it is acceptable for 180