20.5 The following problem situations occurred in a manufacturing firm. What questions should you ask to understand the problem?
Customer complaints about product quality have increased.
What is it, specifically, that customers are complaining about?
Has anything happened to change product quality during the past few years?
Is poor product quality the result of:
Poor quality raw materials?
Inadequate product specifications? If so, can they be altered to improve quality?
Changes in production procedures?
Other possibilities for poor quality
Does the company have a total quality management (TQM) program? Should they?
Accounting sees an increase in the number and dollar value of bad debt write-offs
Has the company recently changed its credit policy? If so, why?
Are certain customer groups more delinquent than others are?
What collection procedures does the company employ? Are they adequate? If not, why not?
Are early payment discounts and late payment penalties adequate?
Are current economic conditions affecting delinquency rates?
Operating margins have declined each of the past four years due to higher-than-expected production costs from idle time, overtime, and reworking products
Does the production scheduling system perform satisfactorily? If not, why not?
Are there delays in receiving materials? If so, why? What are the current policies for handling the receipt of raw materials?
What causes the overtime problem? Increasing sales, understaffed lines, inefficient workers?
What economic conditions are affecting production costs?
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