Spacely Sprockets Company manufactures a high-tech component that passes through two production processing departments, Molding and Assembly. Department managers are partially compensated on the basis of units of products completed and transferred out relative to units of product put into production. This was intended as encouragement to be efficient and to minimize waste.
Amy Finchback is the department head in the Molding Department, and Fred Rococco is her quality control inspector. During the month of December, Amy had three new employees who were not yet technically skilled. As a result, many of the units produced in November had minor molding defects.
In order to maintain the department's normal high rate of completion, Amy told Fred to pass through inspection and on to the Assembly Department all units that had defects non-detectable to the human eye. "Company and industry tolerances on this product are too high anyway," says Amy. "Less than 2% of the units we produce are subjected in the market to the stress tolerance we've designed into them. The odds of those 2% being any of this month's units are even less. Anyway, we're saving the company money."
- What alternatives does Fred have in this situation ?
- What might the company do to prevent this situation from occurring ?