Toys Inc. Case Study

Toys, Inc. Case Analysis

Emily Belchyk

Operations Management

September 6, 2015

Professor Curry

Analysis

For a company that has been around for twenty years, sales should not be declining. Although the company has not lost any money, sales remain stagnant. To help the company adjust to the declining economy the production manager, Ed Murphy, had to cuts costs and implement a layoff in both the production and product development departments. Optimistic, Murphy believes these cuts will be sufficient enough to increase profits. For a company that has been a leader in the industry, problems such as product quality and innovation should not exist. Keith McNally and Steve Bukowski proposed two different solutions. McNally suggested the company implement a trade-in program, which is where defective products are replaced and then the company then fixes the product and sells at a lower cost. Bukowski suggested that increasing inspections would help to eliminate defective products altogether.

Problem

A veteran company like Toys, Inc. should know better than to make a decision without properly analyzing and inspection. Every company goes through a slow period, and companies must cut cost to keep the company profitable. The company is having to lay off people in departments that are essential in the creation of quality and innovative products. The company wants to reduce cost while still providing quality products to the customer, however with the way the company has been operating future sales are not looking good for the company. A decision must be made on whether to put money into inspecting or replacement products. Each decision has pros and cons and needs to be looked at in closer detail.

Resolution

A combination of the two ideas would be most beneficial for the company. The trade in policy should be temporarily implemented, followed up by a more efficient inspection process. McNally’s suggestion of replacing and fixing defective products would...