2. Capstone Project Final Presentation May 16, 2002 Dr. Thomas Robinson CMfgE

3. Agenda Product Review Goal Review Design Review ManufacturingQualityFinance TL

4. Product Review HITCH MOUNTING RACK WITH FLEXIBLE ACCESSORIES THAT FIT THE ACTIVE LIFESTYLE. TL

5. Bao Doan - Quality Engineer James Rice - Research and Development Specialist Jim Lambert - Marketing Lindsey Erickson - Design Engineer Ramon Tejada - Controller Randy Renwand - Director of Operations Tim Legris - Project Manager TL

6. Company Goals Determine manufacturing capability by July 31st 2002 by July 31st 2002 Verify design through market surveys Proof and Pilot run verification Prepare for rollout utilizing yield management TL

7. Company Goals Continued Determine ideal FleXhitch retailer and stock 20 stores with 5 units each Product for sale in stores by November 1st 2002 Implement KANBAN manufacturing process Develop Marketing strategy to enter the new vehicle market Capture 50% of Southern California market by December 2003 Perform Market Analysis and improve sales approach to meet goals Implement a Focus Team to reduce production costs by 30% and increase yield by 40% TL

8. Company Goals Continued Be a nationwide producer of hitch accessories by January 1st, 2006 Consistently high quality to promote brand recognition Product available as an option on new vehicles worldwide Provide Distributor Franchises TL

9. TIMELINE

10. Product Plan - One Year Projection Universal Hitch Motorcycle Rack Storage Rack with removable rail Gas Can Rack Tail Light Kit LE

11. Product Plan - Five Year Projection Golf Bag Rack Lockable Tool box Lumber Rack Winch Rack Barbecue Rack LE

12. External Manufacturing Benchmarking RR Select process All Processes for most common product Identify leaders for each process Smaller Company = SPORTSRACK Collect Data Margin = 50%, Productivity = 80%, Efficiency = 90% Analyze Data Process vs. Process

13. Plant Projection - 1 Year Manufacturing Systems Little JIT - Schedule inventory, Ensure resources, followed by Kanban Mechanization CAD & CAM, Combine some operations Human Resources Five flexible operators Facility 50,000 sq.ft. 2/3 manufacturing. 1/3 warehouse RR

14. Plant Projection - 3 Year Manufacturing Systems MRP begins Mechanization CIM - network computers and machines Human Resources Two Leads, Five flexible operators Facility 50,000 sq.ft. 2/3 manufacturing. 1/3 warehouse RR

15. Plant Projection - 5 Year Manufacturing Systems Big JIT - Eliminate all waste, MRPII Mechanization Some automatic loading and unloading Human Resources One supervisor, Three Leads, Seven flexible operators Facility 50,000 sq.ft. 3/4 manufacturing. 1/4 warehouse RR

16. Router (Document #ROU001) for Universal Hitch FH-UHI-001

17. Supply Chain RR Steel Mill Steel Vendor FlexhitchCoating Retailer Customer DecisionOperationStorageTransit

18. Supply Chain Continued Computerized order tracking Minimize Bull-whip Effect Innovative Flexhitch products Higher Margins = Higher Instability Match a Responsive Supply Chain Mis-match an Efficient Supply Chain Outsourcing Material forming and cutting Coating and Plating RR

19. Flexible Plant Layout with Flowchart WAREHOUSE INCOMING MATERIAL CELL 1 SHIPPING DOCK OFFICESOFFICESOFFICESOFFICES CELL 2 CELL 3 CELL 4 CELL 5 RECEIVING DOCK WAREHOUSE FINISHED GOODS QUALITY ASSURANCE BASE 001 002003 004 008 006007 0090010 005

20. Quality Goals Manufacture a high quality product Less than 1% customer returns in the first year Train employees to follow instructions & procedures Establish a Continuous Improvement team In process inspections Achieve ISO 9001 certification by April 31st, 2003 ISO Oversight Committee Implement Good Manufacturing Practices (GMP) Internal auditing BD

21. Quality Organization

22. Organization Structure

23. Quality Manual Purpose Describe the policies & control structure of the Quality Management System used to achieve the mission at Flexhitch. Content Documents Flexhitch Processes Includes 20 sub-sections Follows ISO 9001 guidelines Continuous Improvement Work instructions and methods Application to Flexhitch Specific work procedures and instructions BD

24. Work Procedures In process inspections at workstations Developed for Flexhitch Surface Coating Finish Dimensional Hole alignment Surface finish Joints Strength Additional procedures for each new product BD

25. Quality Procedure for Surface Finish Color Test Alternate Color Test Method Adhesion General Appearance Solvent Resistance BD

26. Develop work procedures and checklists for each critical manufacturing process Continue to develop and modify working documents to achieve ISO certification Oversight Committee ensures focus on the continuous quality improvement process Future Quality Efforts BD

27. Promotional Objectives & Strategies 1. Greatest Challenge 1 st Year: Lack of Market Awareness 2. Strategies for Enhancing Market Awareness A. Sales display at place of business B. Company website (on-line & B-to-B sales) C. Employees promotion D. Car & Truck Dealership E. Print Advertising F. Local Cable outlets RT

28. Cash Flow Analysis – 1 st Year 1. Total Operating Costs (rounded) $ 1,215,000 2. Financing A. Cost of borrowing 1.215M @ 8.1% $ 98,415 Total Costs of Operations $ 1,313,000 3. Operating Costs per Day (261 operating days) A. $ 1.313 million / 261 = $ 5,032 Average Capital Recovery ($5, 032 / 48 units = ) $ 105 Cost Per Item RT

29. Rate of Return – 1 st Year Average Capital Recovery Cost per Item $ 105.00 Average Capital Recovery Cost per Item + 18% Internal Rate of Return $ 123.00 RT

30. Projected Productivity Schedule Year PPDay x DPM = PPMonth = Accum. % Increase 1 48 22 960 = N/A 2 62 22 1, 344 = 28.5 3 110 22 2, 419 = 44 5 219 22 4, 838 = 50 RT

31. Cash Flow Analysis – 2 nd Year 1. Total Operating Costs (rounded) $ 1,000,000 2. Financing A. Cost of borrowing 1.215M @ 8.1% $ 81,000 Total Costs of Operations $ 1,081,000 3. Operating Costs per Day (261 operating days) A. $ 1.081 million / 261 = $ 4,141 Average Capital Recovery ($4, 141 / 62 units = ) $ 67 Cost Per Item RT

32. Rate of Return – 2 nd Year Average Capital Recovery Cost per Item $ 67.00 Average Capital Recovery Cost per Item + 18% Internal Rate of Return $ 79.00 Internal Rate of Return if Prices are Unchanged $ 123.00 RT

33. Cash Flow Analysis – 5 th Year 1. Total Operating Costs (rounded) $ 1,000,000 2. Financing A. Cost of borrowing 1.215M @ 8.1% $ 81,000 Total Costs of Operations $ 1,081,000 3. Operating Costs per Day (261 operating days) A. $ 1.081 million / 261 = $ 4,141 Average Capital Recovery ($4, 141 / 219 units = ) $ 18 Cost Per Item RT

34. Click here for more information… >> www.FleXhitch.com << >> www.FleXhitch.com << FleXhitch 498 Flexhitch Way Long Beach, CA 90000 Phone: (562) 985 - FLEX Fax: (562) 985 - 0000

35. END (this slide is not in pres.)

36. Universal Base with Cart JR

37. Cycle Rack & Horizontally Mounted Gas Can JR

38. Cycle Rack & Vertically Mounted Gas Can JR

39. Enclosed Bin with Cart JR

40. Quality Functional Deployment - Timing Chart BD

41. We plan to produce and provide the most versatile rack available to the general public. It will be light in weight, easy to use or store, and offered at a reasonable or competitive price. In so doing, we expect to provide a high quality work life for our employees and a superior return on investment for our shareholders. Mission Statement JL

42. FleXhitch Preliminary Schedule

43. Flexible Plant Layout with Flowchart WAREHOUSE INCOMING MATERIAL CUT TO SIZE SHIPPING DOCK OFFICESOFFICESOFFICESOFFICES FORMING MACHINING JOINING LABELING ASSEMBLY PACKAGING RECEIVING DOCK WAREHOUSE FINISHED GOODS QUALITY ASSURANCE BASE