Page 15 - CIMA OCS Workbook February 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

It may also be influenced by ease of access to the appropriate raw materials and components
used in the manufacturing and installation process. For example, there is no detail of the
materials used by Parkes’ Parks in its products. It may use a different specification of wood, or it
may use other materials such as steel or plastic products. The purchase of wood products by
Trigg Adventure may be subject to more variability problems associated with sourcing suitable
products of the appropriate specification – materials may be purchased when available and held
until ready to use.
Suggestions to improve the operating cycle of Trigg Adventure

1 – Can more efficient inventory management be introduced? Perhaps some element of ‘just-in-
time’ inventory management could be introduced for some materials and components,
particularly if suppliers have proved to be reliable in the past. This would require careful
monitoring by Stores Dept, in conjunction with Ben Darcy, the Production Director, to ensure
that lead times were appropriate and that production and installation schedules were co-
ordinated. This may conflict with Ben Darcy’s preference of carrying an extended range of
inventory to ensure that all orders placed can be supplied and installed promptly.
2 – Can management of trade receivables be improved? It could be that commercial customers
are exceeding any credit period agreed, and steps could be introduced to tighten up on
collection of cash due. As a related point, this may conflict with Sally Gomez’ vision of wanting to
extend credit the period for commercial customers as an incentive for customers to do business
with Trigg Adventure.
3 – Can the payables’ credit period be extended? It may be that Trigg Adventure pays promptly,
either to earn discounts or to be regarded as a ‘ethically responsible trader’. However, if
extended credit terms could be agreed with major suppliers, this would improve the operating
cycle.

Thanks
Finance Officer.

KAPLAN PUBLISHING 71