Answer question 1-3. One paragraph for each question ( 5-10 sentences ). Thank you!

CASE CASE 5.1 Johnson Toy Company Located in Biloxi, Mississippi, the Johnson Toy Company Lori, those present included Carolyn Coggins, the firm's is celebrating its seventy-fifth year of business. Amy sales manager, Cheryl Guridi, the logistics manager: Johnson, who is president, and Lori Johnson, who is vice Greg Sullivan, the controller; and Kevin Vidal, the plant president, are sisters and are the third generation of their engineer. Coggins had just reported that she believed family to be involved in the toy business. The firm man there were between 1.5 million and 2 million Jungle Jim ufactures and sells toys throughout the United States. the Jogger dolls in retail stores, and Sullivan had indi- The toy business is very seasonal, with the majority of cated there were 2,567,112 complete units in various sales occurring before Christmas. A smaller peak occurs public warehouses in Biloxi. Vidal said that he was still in the late spring-early summer period, when sales of trying to count all the unassembled component parts, outdoor items are good. adding that one problem was that they were still being The firm relles on several basic designs of toys received from suppliers, despite the cancellation which have low profit margins but are steady sellers Amy said, "Let's wait a few weeks to get a complete and on new designs of unconventional toys, whose count of all the dolls and all the unassembled compo introduction is always risky but promises high profits if nent parts. Lori, I'm naming you to work with Carolyn the item becomes popular. The firm advertises regularly and Kevin to develop recommendations as to how we on Saturday morning television shows for children. can recycle the Jungle Jim item into something we can Late last year, just before Christmas, the Johnson sell. Given the numbers involved, I'm willing to turn out Toy Company introduced Jungle Jim the Jogger doll, mod some innocuous doll and sell it for a little more than the eled after a popular television show. Sales skyrocketed, cost of recycling because we can't take a complete loss and every retailer's stock of Jungle Jim the Jogger dolls was on all these damned Jungle Jim dolls! Greg says we have sold out in mid-December, the Johnson Company could nearly 2.6 million of them to play with, so let's think of have sold several million more units if they had been something." available before Christmas. Based on the sales success of "Your 2.6 million figure may be low," said Coggins. this doll, Amy and Lori made commitments to manufac "Don't forget that there may be nearly 2 million in the ture 10 million Jungle Jim the Jogger dolls this year and to hands of the dealers and that they will return them." introduce a wide line of accessory items, which they hoped "Return them?" questioned Amy. "They're not every doll owner would also want to have. Production was defective. That's the only reason we accept returns. well under way, and many retailers were happy to accept the retailers made a poor choice. It's the same as if dolls in January and February because they were still a they ordered sleds and then had a winter with no snow. fast-selling item, even though the toy business itself was We are no more responsible for Jungle Jim's sex life than sluggish during these months. they are!" Unfortunately, in the aftermath of a Valentine's Cheryl Guridi spoke up: "You may be underes- Day party in Hollywood, the television actor who por- timating the problem, Amy. One of our policies is to trayed Jungle Jim the Jogger became involved in a widely accept the dealer's word as to what is defective, and right publicized sexual misadventure, the details of which now there are a lot of dealers out there claiming defects shocked and disgusted many readers and TV viewers, in the Jungle Jim dolls. One reason that Kevin can't get and we would be embarrassed to describe them. Ratings an accurate count is that returned dolls are showing up of the television series plummeted, and within a month it on our receiving dock and getting mixed up with our in- had been dropped from the air. On March 1, the Johnson stock inventory. Company had canceled further production of the Jungle "How can that happen?" asked Amy, angrily. Jim the Jogger dolls, although it had to pay penalties to "We're not paying the freight, also, are we?" some of its suppliers because of the cancellation. The "So far, no," responded Guridi. "The retailers are company had little choice because it was obvious that paying the freight just to get rid of them." sales had stopped. "We've received several bills in which the retailer On April 1, & gloomy group assembled in the has deducted the costs of the Jungle Jim dolls and of the Johnson Company conference room. Besides Amy and freight for shipping them back from what he owes us," said Sullivan. "That was one item I wanted to raise while assume that risk, the retailer is willing to take more of we were together." our merchandise." "We can't allow thatl" exclaimed Amy. "Are there no limits to this policy?" asked Amy. "Don't be so sure," responded Sullivan. "The "Informal ones," was Coggins's response. "It account in question has paid every bill he's owed us on depends on the salesperson and the account. I don't time for 40 years. Do you want me to tell him we won't think there is much abuse, although there is some." reimburse him?" "How do the goods get back to us under these cir- "This is worse than I imagined," said Amy. "Just cumstances?" asked Amy. what are our return policies, Lori?" "The salespeople either keep them and shuffle "Well, until today, I thought we had only two," said them about to other customers or-if it's a real loser- Lori. "One for our small accounts involves having our they ask us what to do," replied Coggins. salespeople inspect the merchandise when they make a "Greg." said Amy, do our records reflect these sales call. They can pick it up and give the retailer credit returns and transfers?" off the next order." "Oh, fairly well," was his response. "We lose track "Sometimes they pick up more than defective mer- of individual items and quantities, but if the salesperson chandise," added Coggins. "Often, they'll take the slow is honest and I think ours are-we can follow the dol- movers out of the retailer's hands. We have to do that as lar amount of the return to the salesperson's inventory, a sales tool to another retailer, or back here to us. We do not have *That's not quite right," interjected Vidal good controls on the actual items that are allowed for "Sometimes, the returned items are just plain shop- returns. Kevin and I have difficulty in reconciling the worn-scratched, dented, and damaged. That makes it value of returned items that wind up back here. Carolyn's hard for us because we have to inspect every item and records say they're okay for resale, and Kevin says they're decide whether it can be put back into stock. When we too badly damaged." think a particular salesperson is accepting too many "I insist on the reconciliation before we allow the shopworn items, we tell Carolyn, although it's not clear to goods back into our working inventory," said Guridi. me that the message reaches the salespeople in the field." That way I know exactly what I have here, ready to ship." "I wish I had an easy solution, said Coggins. "We "You know, I'm finding out more information used to let our salespeople give credit for defects and about inventories and returns than I thought existed." then destroy everything out in the field. Unfortunately, said Amy. some abused the system and resold the toys to discount "Too many trips to Paris, dearest" said Lori, and stores. At least now we can see everything we're buying the others all suppressed smiles. back. I agree we are stuck with some shopworn items, Amy decided to ignore Lori's remark, and she but our salespeople are out there to sell, and nothing looked at Guridi and asked, "Are you satisfied with your would ruin a big sale quicker than for our salespeople to control over inventories, Cheryl?" start arguing with the retailer, on an item-by-item basis, "I have no problem with the ones here in Biloxi," was as to whether something being returned happens to be Guridi's response, but I have an awful time with the inven- shopworn." tories of return items that salespeople carry about with "Is there a limit to what a salesperson is permitted them, waiting to place them with another retailer. I'm not to allow a retailer to return?" asked Amy. always certain they're getting us top dollar, and each sales- "Well, not until now responded Coggins. "But person knows only his or her own territory. When Carolyn with this Jungle Jim safu we can expect the issue to and I are trying to monitor the sales of some new item, we occur. In fact, I have several phone queries on my desk never know whether it's bombing in some areas and riding concerning this. I thought I'd wait until after this meet around in salespeople's cars as they try to sell it again." ing to return them. "Have you now described our returns policy, such "Well, I think we'd better establish limits-right as it is?" asked Amy, looking at everybody in the room. now," said Amy. "No," was the response murmured by all. Sullivan "Be careful." said Lori. "When I was out with the spoke: "For large accounts we deduct a straight 2 percent salespeople last year, I gathered the impression that off wholesale selling price to cover defectives, and then some were able to write bigger orders by implying that we never want to hear about the defectives from these wed take the unsold merchandise back, if need be. If we accounts at all." "That sounds like a better policy," said Amy. "How knowledge about volume or patterns of returns until it's well is it working?" too late. That's their very nature." "Up until Jungle Jim jogged where he shouldn't, it Guridi asked, "Could we have field representatives worked fine. Now a number of large accounts are plead who do nothing but deal with this problem? The retail- ing 'special circumstances' or threatening to sue if we ers would be told to hang onto the defectives until our don't take back the dolls." claims reps arrive." "They have no grounds for suit," declared Amy, Coggins replied, "That would be expensive, "You're right," said Coggins, "but several of their because most retailers have little storage space for any- buyers are refusing to see our sales staff until the matter thing and would expect our claims rep to be there imme- is resolved. I just heard about this yesterday and meant diately. Besides, it might undermine our selling efforts if to bring it up in today's meeting. I consider this very retailers could no longer use returns to negotiate with as serious." they talked about new orders." "Damn it!" shouted Amy, pounding the table with "That may be," interjected Amy, "but we cannot her fist. "I hope that damned jogger dies of jungle rot! continue having each salesperson tailoring a return pol- We're going to lose money this year, and now you're all icy for each retailer. That's why we're in such a mess with telling me how the return policy works, or doesn't work, the jogger doll. We have to get our return policy estab- as the case may be! Why can't we just have a policy of all lished, made more uniform, and enforced. We cannot go sales being final and telling retailers that if there is an through another fiasco like Jungle Jim the Jogger for a honest defect they should send the goods back here to us long time. We're going to lose money this year, no mat- in good old Biloxi?" ter what, and I have already told Kevin that there will be "Most of the small accounts know nothing about virtually no money available for retooling for next year's shipping." responded Vidal. "They don't know how to new products." pack, they don't know how to prepare shipping docu- ments, and they can't choose the right carriers. You Questions ought to see the hodgepodge of shipments we receive 1. From the standpoint of an individual concerned with from them. In more cases than not, they pay more in accounting controls, discuss and evaluate Johnson Toy shipping charges than the products are worth to us. I'd Company's present policies for handling returned items. rather see them destroyed in the field. 2. Answer Question 1, but from the standpoint of an indi- Sullivan spoke up. Td object to that. We would vidual interested in marketing. need some pretty tight controls to make certain the 3. Propose a policy for handling returns that should be goods were actually destroyed. What if they are truly adopted by the Johnson Toy Company. Be certain to list defective, but improperly disposed of, then fall into the circumstances under which exceptions would be allowed. hands of children who play with them and the defect Should it apply to the Jungle Jim dolls? causes an injury? Our name may still be on the product, 4. Should this policy, if adopted, be printed and distributed to all of the retailers who handle Johnson Toy Company and the child's parents will no doubt claim the item was products? Why or why not? If it should not be distributed purchased from one of our retailers. Will we be liable? to them, who should receive copies? Why can't we have everything come back here? We have 5. Assume that it is decided to prepare a statement on returns enough volume of some returned items that we could to be distributed to all retailers and that it should be less think in terms of recycling parts." than a single double-spaced page. Prepare such a statement. Vidal responded, "Recycling is a theoretical solu 6. On the basis of the policy in your answer to Question 3, tion to such a problem, but only in rare instances will it develop instructions for the Johnson Toy Company distri- pay. In most instances the volume is too small and the bution and accounting departments with respect to their cost of taking toys apart is usually very high. However, roles and procedures in the handling of returns. the Jungle Jim product involves such a large volume that 7. Assume that you are Cheryl Guridi, the firm's logistics it is prudent and reasonable to think up another product manager. Do you think that the returns policy favored by that utilizes many of the parts. It would even pay to the logistics manager would differ from what would be modify some machines for disassembling the Jungle best for the firm? Why or why not? 8. Until the policy you recommend in your answer to Jim doll." Question 3 takes effect, how would you handle the imme- "As I listen to this discussion," said Lori, "one diate problem of retailers wanting to return unsold Jungle fact becomes obvious: We will never have very good Jim the Jogger dolls