AKA Bhd (AB) is a medium sized manufacturer of automobile’s body kits with an average annual turnover of RM730, 000. Located in Seberang Perai Industrial Park, Penang, its fiber range of products include standard and sporty front and rear bumpers for Proton cars, rear and mid spoiler for Perodua and several other sporty and stylish side skirting for both Proton and Perodua personal vehicles. AB has developed quite an outstanding goodwill among its 150 customer, majority are car dealers, wholesalers and automobile accessories outlets. However, none of them could be considered as major customers. Thus, AFAB chooses to gear its production based on sales forecast derived from a loosely projected demand. AB’s production activities are described below:-
Production Scheduling
Harry, AB’s production engineer, who is also responsible to control the work area, prepares a production schedule for each production batch. Harry is also required to check the inventory level through the terminal available at the storeroom before each production batch is put into motion. If he finds that the inventory is insufficient, he will personally contact any authorized supplier as listed in the recommended supplier file. The supplier will send the materials together with the invoice directly to the storeroom. At the inventory storeroom, Harry signs the delivery note to indicate receipt of the materials from the supplier and hands over the invoice to the accounts department for clearance. No other checks are made, as long as the supplier is one of those in the recommended supplier file.
Work Centers
In the work centers, Harry prepares a work order sheet detailing the exact materials used and processes for each production batch. These details are keyed into the computer system using the terminal at the factory floor. He prints and then passes the document to Kamal who is AFAB’s production supervisor. Harry also prepares a material requisition note authorizing the inventory storeroom to release raw materials for use in the production process. Kamal then prepares a move ticket recording work done in each work center. He sends it to Harry for authorization before the batch could be relayed to another section. Once all work are done, a completed job ticket is issued by Kamal who transmits it directly via the computer system to the cost accounting section of the accounts department. The accounting department makes no other check or review. Each production operator then submits his/her time card to the payroll section of the accounting department for salary and overtime claims. Kamal also verbally notifies Harry once the production process is completed. Harry will then mark his copy of the move ticket as “complete” and file it for future reference. Each responsible person will need to number all of the documents used in the whole production process.
Required: 

a). Discuss three (3) weaknesses in AB’s present production scheduling and three (3) weaknesses in its work centers and explain the potential risk exposures posed by the weaknesses. Suggest relevant six (6) improvements that can be used to address the weaknesses identified earlier.
b). Physical controls remain as the main concern in the conversion cycle, especially for business dealing with tangible assets. The loss of its assets and product would have a direct negative impact on a business’s profit margin and eventually will affect the sustainability of the business itself. Discuss how big data analytic can be used to improve production.

Answer rating: 100% (QA)

ANSWER a No Weaknesses Improvement 1 Harry AB production engineer who is responsible to control the work area prepares a production schedule for each production batch check the inventory level through ... View the full answer