General Motors Factory Relocation Program By Yudi Jin JP Park By Yudi Jin JP Park

Company Overview Founded in 1908 World’s 2nd Largest Company presence in 140 countries Employs 244,500 worldwide Major Brands –Buick, Cadillack, Chevrolet, GMC, HUMMER, Saab Founded in 1908 World’s 2nd Largest Company presence in 140 countries Employs 244,500 worldwide Major Brands –Buick, Cadillack, Chevrolet, GMC, HUMMER, Saab

Problem? Stock Price –April 28, 2000: –May 1, 2009: 1.81 Financial Statements –Net Loss 2008: 30,860, : 38,732,000 Decreasing Demand –2008: 23% decrease in demand from 2007 Hypothesis: Gross Inefficiencies Stock Price –April 28, 2000: –May 1, 2009: 1.81 Financial Statements –Net Loss 2008: 30,860, : 38,732,000 Decreasing Demand –2008: 23% decrease in demand from 2007 Hypothesis: Gross Inefficiencies

Scope of Project GM North America –United States Top 10 Cities (Demand) Factory Location –Service –Wages –Various Costs Transportation GM North America –United States Top 10 Cities (Demand) Factory Location –Service –Wages –Various Costs Transportation

GM Operations in the US Total Employees: 97,067 Factories: 86 Cars and Trucks Produced –Q1 2009: 1,652,909 –2008: 3,097,924 –2007: 4,489,818 Total Employees: 97,067 Factories: 86 Cars and Trucks Produced –Q1 2009: 1,652,909 –2008: 3,097,924 –2007: 4,489,818

Current GM Factory Locations

Wage Tables

10 Cities with Lowest Production Wages (percent National) Brownsville-Harlingen, TX (76) Johnstown, PA (84) Oklahoma City, OK, (85) Orlando-Kissimmee, FL, (85) Birmingham-Hoover, AL, (88) Knoxville, TN, (88) Lincoln, NE, (89) Amarillo, TX, (91) Dallas-Fort Worth, TX, (91) Visalia-Porterville, CA, (92) Brownsville-Harlingen, TX (76) Johnstown, PA (84) Oklahoma City, OK, (85) Orlando-Kissimmee, FL, (85) Birmingham-Hoover, AL, (88) Knoxville, TN, (88) Lincoln, NE, (89) Amarillo, TX, (91) Dallas-Fort Worth, TX, (91) Visalia-Porterville, CA, (92)

Top 10 areas for GM sales Total GM sales Rank Market (add 000) 1. New York-Newark-Edison, NY-NJ-PA $22,756, Los Angeles-Long Beach- Santa Ana, CA $22,331, Dallas-Fort Worth- Arlington, TX $13,541, Chicago-Naperville- Joliet, IL-IN-WI $12,594, Houston-Baytown-Sugar Land, TX $12,575, Detroit-Warren- Livonia, MI $10,261, Washington-Arlington- Alexandria, DC-VA- MD-WV $10,068, Riverside-San Bernardino-Ontario, CA $9,007, Seattle-Tacoma- Bellevue, WA $8,870, Atlanta-Sandy Springs- Marietta, GA $8,684,820 Total GM sales Rank Market (add 000) 1. New York-Newark-Edison, NY-NJ-PA $22,756, Los Angeles-Long Beach- Santa Ana, CA $22,331, Dallas-Fort Worth- Arlington, TX $13,541, Chicago-Naperville- Joliet, IL-IN-WI $12,594, Houston-Baytown-Sugar Land, TX $12,575, Detroit-Warren- Livonia, MI $10,261, Washington-Arlington- Alexandria, DC-VA- MD-WV $10,068, Riverside-San Bernardino-Ontario, CA $9,007, Seattle-Tacoma- Bellevue, WA $8,870, Atlanta-Sandy Springs- Marietta, GA $8,684,820

Project Locations

Comparison

Formulation All demand in top 10 cities must be met , , , , , , , , , ,016.1 Each factory on average employs 1115 employees costing $32,925,504 in wages (national average) per year Each factory can produce 49,518 vehicles per year Need to place roughly 63 factories in order to satisfy demand Average cost of transportation is $.857 per vehicle per mile All demand in top 10 cities must be met , , , , , , , , , ,016.1 Each factory on average employs 1115 employees costing $32,925,504 in wages (national average) per year Each factory can produce 49,518 vehicles per year Need to place roughly 63 factories in order to satisfy demand Average cost of transportation is $.857 per vehicle per mile

KnoxvilleLincolnAmarilloDallasVisaliaBrownsvilleJohnstownOklahoma CityOrlandoBirmingham NY LA Dallas Chicago Houston Detriot Washington Riverside Seattle Atlanta Distances between top 10 cities (mi.)

LP Solution Minimize factory location w/ respect to cost Solution using Ampl: 7 factories in Dallas shipping to Dallas 11 factories in Visalia shipping to LA 5 factories in Visalia shipping to Riverside 5 factories in Visalia shipping to Seattle 6 factories in Brownsville shipping to Houston 11 factories in Johnstown shipping to NY 6 factories in Johnstown shipping to Chicago 5 factories in Johnstown shipping to Detroit 5 factories in Johnstown shipping to Washington DC 5 factories in Birmingham shipping to Atlanta Objective Value - $2,750,998, % cost decrease from current GM locations Minimize factory location w/ respect to cost Solution using Ampl: 7 factories in Dallas shipping to Dallas 11 factories in Visalia shipping to LA 5 factories in Visalia shipping to Riverside 5 factories in Visalia shipping to Seattle 6 factories in Brownsville shipping to Houston 11 factories in Johnstown shipping to NY 6 factories in Johnstown shipping to Chicago 5 factories in Johnstown shipping to Detroit 5 factories in Johnstown shipping to Washington DC 5 factories in Birmingham shipping to Atlanta Objective Value - $2,750,998, % cost decrease from current GM locations

Local Search With the unbounded problem there are an enormous number for potential factory locations, solving using an LP solver would not be feasible, another solution would be to use Local Search. After initially placing all factories, it is easy to shift one factory and recalculate costs Ex. With the unbounded problem there are an enormous number for potential factory locations, solving using an LP solver would not be feasible, another solution would be to use Local Search. After initially placing all factories, it is easy to shift one factory and recalculate costs Ex.

Resources GM ANNUAL FINANCIAL REPORT US Department of Labor toward-cost-goals-with-new-supply-techniqueshttp:// toward-cost-goals-with-new-supply-techniques Racher Press Research love-the-aveohttp://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveo GM ANNUAL FINANCIAL REPORT US Department of Labor toward-cost-goals-with-new-supply-techniqueshttp:// toward-cost-goals-with-new-supply-techniques Racher Press Research love-the-aveohttp://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveo