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
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