Case Study Analysis, Read carefully the following case/scenario and answer the questions given at the end. A
Question:
Case Study Analysis, Read carefully the following case/scenario and answer the questions given at the end.
A manufacturing company, involved in the business of food processing, faces a technical problem at one of their major plants. Recently they faced a technical issue which resulted in loss of production and was fixed by engaging their mechanical staff. Now this technical problem can result in even bigger loss of production and if it gains attention of public through social or electronic media, then company’s reputation will be at stake. Senior management of the manufacturing company is really worried on this current scenario. After brainstorming, the senior management decided to consult a specialist firm for help. This time senior leadership wanted to get a detailed technical analysis of their production machines. The specialist firm conducted a detailed technical audit of all 15 manufacturing machines and presented the following findings.
Risk Level | Quantity | percentage |
very high | 1 | 7% |
high | 7 | 47% |
medium | 5 | 33% |
low | 0 | 0% |
very low | 2 | 13% |
The audit revealed that 1 very high, 7 high and 5 medium risks for machines required immediate reduction measures. The senior leadership entrusted same specialist firm to fix these technical faults with aggressive schedule so that manufacturing company does not bear a huge loss. The specialty firm performed the rectification measures in production machines within due time and presented the following updated data.
Risk Level | Quantity | percentage |
very high | 0 | 0% |
high | 0 | 0% |
medium | 0 | 0% |
low | 7 | 74% |
very low | 8 | 53% |
As the above table indicates, by involving a specialized firm at a high cost, the senior leadership of the manufacturing company was able to retrieve the production setup back on track.
Question 1: Should the manufacturing company involve the specialist firm in the first instance of technical fault? Explain your viewpoint with the reasoning in minimum 300 words. [10 Marks]
Question 2: State FIVE measures that the manufacturing firm should take at this stage to avoid such technical issues in the future. Measures should be specific and self-explanatory. [10 Marks]
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1119036432
7th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso