Contingency plan is planning for a crisis and developing methods to deal with the crisis.
.Toyota had to manufacture parts to fix the faulty accelerator pedal.
Toyota had to replace the faulty floor mats.
. Toyota distinctive capability was quality and reliability.
.Toyota had never faced problem of this nature before because it was a pioneer of lean manufacturing (so didn't expect and prepare for this problem)
. Toyota could hold stock for a similar crisis but this would go against the lean production philosophy.
.Toyota was disrupted by the tsunami that ef Spell check your answer fected japan. They could have had alternatives suppliers around the word. However the disadvantage of this is you cant benefit from economies of scale. inaddition have many suppliers means addition cost as Toyota has to train the in the toyota way.
overall, contingency planning will increase cost e.g. alternative supply chain, and holding millions of car parts.
Contingency planning cannot cover all eventualities.
This is a opportunity cost e.g spending money, time on other uses instead of something that might not occur.
however, contingency planning reduced the impact of the product recall.