Case Study MemorandumTo:From:Date:Subject:Detroit Plant StrategySummaryDevelop a strategy for WMC's Detroit plant which is no longer viable in due to underinvestment, labor issues and product-process mismatch. This led to a negative return on assets, a high expense ratio (6.00), and low sales figures. The report investigates the issues causing the situation. A recommendation for the Detroit plant will be made based on the results. Problem Analysis Detroit Plant Environment Detroit production is unique compared to other Wriston plants. Runs are typically low volume, involve a longer setup time than turnaround time, and vary widely due to the high volume of different product lines, families, and models. Traditionally, capital investment has lagged in Detroit and equipment is outdated and inefficient, leading to higher maintenance costs. Built on an ad hoc basis, the layout of the Detroit factory is fragmentary; production generally required complex flows. Thus, the environment contributed to an unmotivated workforce. Poor work habits are common, including high weekday absenteeism and high turnover. Financial Practices WMC's accounting practices incorrectly allocate fixed manufacturing costs to the three Detroit groups proportionately, leading to the lack of profitability of Group 3. The termination of Group 3 shifts a greater percentage of fixed costs to the other groups , which impacts their ability to be profitable. Additionally, WMC does not take into account the extent to which the Detroit plant's production contributes to the operations and profitability of other plants. Currently, each factory is accounted for individually. WMC should reevaluate and consider the...... middle of document ...... on.Word- 989Appendix 1 Detroit Load RateDetroit Load Rate Group 1 Group2 Group3Variable Load Rate 2.12 2.13 2.128 Total Loading Rate 8.596 7.139 4.653Appendix 2 ROA % to Loading RatePlant ROA% Loading RateSandusky, Ohio 29 3.58Essex, Canada 18 5.3Detroit, Michigan -7 6Saginaw, Michigan (2) 48 4. 1Lima, Ohio (1) -12 5.05 Lebanon, Pennsylvania 37 2.64 Tiffin, Ohio 30 3.5 Fremont, Ohio 36 3.65 Lancaster, Ohio NA NA Maysville, Kentucky 26 2.351. The company should evaluate the processes at the Lima plant to better understand, and then implement improvements, to address the negative ROI and low sales at this plant.2. Since the Saginaw plant manages 10 product families and 110 product models, the introduction of a flexible manufacturing system will be beneficial there. This will address high variability and reduce overhead.