Page 6 - OCS Workbook - Day 1 Suggested Solutions (May 2018)
P. 6
CIMA MAY 2018 – OPERATIONAL CASE STUDY
Exercise 1(c) - Quality Costing
Type of cost How it could apply to Mansako
Prevention Costs • Choice of suppliers for key raw materials – especially leather
• Purchasing better quality cutting and sewing equipment in the first place
to ensure consistency and quality of output
• Ensuring all production staff are highly trained
• Regular maintenance of equipment and replacement of key items before
they become problematic
Appraisal Costs Mansako does a quality inspections at the end of the production process but
we are not told what other QC inspections take place such as
• Checking quality of leather received from suppliers
• Checking quality of zips and buckles before they are stitched to the bag
• Stress testing prototype new items and samples of existing products to
ensure they can cope with rigorous use
Internal Failure • Cost of leather rejected or damaged while in stores
Costs • Cost of leather off-cuts due to nature of production process
• Cost of waste leather due to skiving
• Cost of bags rejected at finishing stage
External Failure • Given the competitive nature of the industry and the market positioning
Costs strategy of Mansako, it is vital that leather products arrive in prime
condition into store (e.g. packaging not damaged, bags not stained, no
inconsistencies due to poor quality control)
• Poor quality is most likely to result in lost customers
• In the longer run poor quality could damage the Mansako brand and
undermine the business model of affordable luxury. Note that customers
might share any problems on social media so the impact could be swift.
Exercise 1(d) - Environmental Costing
Type of cost How it could apply to Mansako’s environmental footprint
Prevention Costs • Choice of suppliers – e.g. are they based in Lowerland to reduce green
impact of transportation?
• Monitoring of suppliers to ensure they continue to meet the code (p13)
• Regular maintenance of equipment to ensure energy efficiency.
• Use of recyclable packaging.
Appraisal Costs • Regular monitoring of energy usage to identify if usage has increased
beyond that expected.
• Regular monitoring of water usage to limit waste and leaks.
Internal Failure • Ensuring any rejected and waste leather glass is collected and recycled,
Costs rather than contributing to landfill.
External Failure • Very difficult for Mansako to monitor the extent to which customers
Costs are disposing of packaging and bags in an appropriate manner
48 KAPLAN PUBLISHING