Mr. WMW Engineering Consultants 54 Park Avenue South New York, NY 1000414 February 2005 Mr. Lee IacoccaCEOThe Ford Motor Company 555 Dearborn Avenue Detroit, MI 54423 Dear Mr. Iacocca, As a consultant engineer with WMW, the company you engaged to evaluate the Ford Pinto gas tank placement problem, I hereby submit my results.
Your engineers have come up with four solutions to the problem: to relocate the gas tank from its present position between the differential and the rear bumper, to above the differential; to install a part that will prevent the gas tank being ruptured by the exposed bolts of the differential in the event of a rear-end crash; to insert a rubber bladder into the gas tank to prevent fuel spillage; or to stay with the original design and absorb the legal costs. The first two solutions do not look practicable since the first one reduces the trunk space and the cost of the second one is much higher than your estimation of the cost of lawsuits, compensation and repairs. Then, a comparison must be made between the remaining two solutions. The total cost of the third solution is $63, 3 million and your estimation for the cost of the other one is $49, 5 million. The third solution is much safer than the other as your catastrophe assumptions for the calculation of the estimation show; which are 2100 burned vehicles, 180 serious burn injuries, and 180 burn deaths. But the consistency of your estimation must be well thought-out since the injuries and deaths might be much more, or the legal costs might be increased and therefore the estimated cost might be much more than $49, 5 million.
The Essay on Least-cost Solution
The term least-cost solution does not describe one specific principle in economics. Least-cost solution covers a wide diversity of economical topics that help form an ultimate solution. The term can be introduced in the context of a firms aim and objectives e.g. “profit maximization”. In many cases firms may have other objectives such as providing quality to customers and thus may ...
So, in such a situation the $63, 3 million case might be more profitable. Even if it is not more profitable, since the third case does not lead that much deaths, it is better for your long-term reliability which is the most important quality for a company. So, I strongly recommend inserting the rubber bladder into the gas tank and giving $13, 8 million more (in the best case for the other solution) to carry on the reliability of your company, which looks as the most appropriate solution for this problem. Yours sincerely,.
