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

2. 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

3. Problem? Stock Price –April 28, 2000: 93.62 –May 1, 2009: 1.81 Financial Statements –Net Loss 2008: 30,860,000 2007: 38,732,000 Decreasing Demand –2008: 23% decrease in demand from 2007 Hypothesis: Gross Inefficiencies Stock Price –April 28, 2000: 93.62 –May 1, 2009: 1.81 Financial Statements –Net Loss 2008: 30,860,000 2007: 38,732,000 Decreasing Demand –2008: 23% decrease in demand from 2007 Hypothesis: Gross Inefficiencies

4. 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

5. 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

6. Current GM Factory Locations

7. Wage Tables

8. 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)

9. Top 10 areas for GM sales Total GM sales Rank Market (add 000) 1. New York-Newark-Edison, NY-NJ-PA $22,756,490 2. Los Angeles-Long Beach- Santa Ana, CA $22,331,511 3. Dallas-Fort Worth- Arlington, TX $13,541,992 4. Chicago-Naperville- Joliet, IL-IN-WI $12,594,549 5. Houston-Baytown-Sugar Land, TX $12,575,414 6. Detroit-Warren- Livonia, MI $10,261,680 7. Washington-Arlington- Alexandria, DC-VA- MD-WV $10,068,928 8. Riverside-San Bernardino-Ontario, CA $9,007,470 9. Seattle-Tacoma- Bellevue, WA $8,870,930 10. Atlanta-Sandy Springs- Marietta, GA $8,684,820 Total GM sales Rank Market (add 000) 1. New York-Newark-Edison, NY-NJ-PA $22,756,490 2. Los Angeles-Long Beach- Santa Ana, CA $22,331,511 3. Dallas-Fort Worth- Arlington, TX $13,541,992 4. Chicago-Naperville- Joliet, IL-IN-WI $12,594,549 5. Houston-Baytown-Sugar Land, TX $12,575,414 6. Detroit-Warren- Livonia, MI $10,261,680 7. Washington-Arlington- Alexandria, DC-VA- MD-WV $10,068,928 8. Riverside-San Bernardino-Ontario, CA $9,007,470 9. Seattle-Tacoma- Bellevue, WA $8,870,930 10. Atlanta-Sandy Springs- Marietta, GA $8,684,820

10. Project Locations

11. Comparison

12. Formulation All demand in top 10 cities must be met 1. 534,575.4 2. 524,592.1 3. 318,116.5 4. 295,860 5. 295,410.5 6. 241,058.3 7. 236,530.4 8. 211,595.5 9. 208,388.1 10. 204,016.1 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 1. 534,575.4 2. 524,592.1 3. 318,116.5 4. 295,860 5. 295,410.5 6. 241,058.3 7. 236,530.4 8. 211,595.5 9. 208,388.1 10. 204,016.1 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

13. KnoxvilleLincolnAmarilloDallasVisaliaBrownsvilleJohnstownOklahoma CityOrlandoBirmingham NY7081185170915522885198332014461082967 LA218314961071143818816292505133225092027 Dallas8436363630152754413162071137636 Chicago5415221053969211015115237901156662 Houston92287560523917333541456447964666 Detriot511788130611942375173734510431161724 Washington487120616021331276517621931343846745 Riverside215114651040138824615792474130124601996 Seattle262526782767220496825542586199731332639 Atlanta2131000110578122691145726846441147 Distances between top 10 cities (mi.)

14. 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 - $2,750,998,404 5-25% 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 - $2,750,998,404 5-25% cost decrease from current GM locations

15. 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.

16. Resources GM ANNUAL FINANCIAL REPORT US Department of Labor http://www.supplyexcellence.com/blog/2006/08/14/gm-drives- toward-cost-goals-with-new-supply-techniqueshttp://www.supplyexcellence.com/blog/2006/08/14/gm-drives- toward-cost-goals-with-new-supply-techniques Racher Press Research http://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveohttp://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveo http://www.domesticsale.com/autoclassified/prices.html GM ANNUAL FINANCIAL REPORT US Department of Labor http://www.supplyexcellence.com/blog/2006/08/14/gm-drives- toward-cost-goals-with-new-supply-techniqueshttp://www.supplyexcellence.com/blog/2006/08/14/gm-drives- toward-cost-goals-with-new-supply-techniques Racher Press Research http://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveohttp://jalopnik.com/340225/gm-sales-decrease-in-2007-but-people- love-the-aveo http://www.domesticsale.com/autoclassified/prices.html