Tbci: the Brick Company, Inc.

Case 2 TBCI: The Brick Company, Inc.

1. Typology TBCI- the brick company Inc. can be classified as a production organization with a dominant flow of goods, which produces to stock. More specifically, due to its repetitive character, standard procedures are used to produce the bricks and put them in stock.

2. Risks For TBCI we can distinguish four main processes: the purchasing process, the inventory process, the production process and the sales process. However, TBCI does not have a typical purchasing process since they only have a contract that gives them the right to extract clay. Therefore, we will refer to this process as the extraction process.

2a. Inherent risks: The risk of relatively unpredictable product demand is applicable to all four processes. Then relating to production; the inherent risks of investment in production facilities; inefficient production; insufficiently reliable pre-calculations by operations office; valuation of work-in-progress; and insufficient alignment between production and demand. Lastly, the sales process contains the inherent risks that transactions are relatively simple; creditworthiness of customers; uncollectability of accounts receivable; unreliable accounts receivable records; and billing errors. 2b. Specific risks: In the extraction process no specific risks have been identified. However, the inventory process contains the risk of keeping a large buffer stock of clay and the risk contained in the breakage action since breakage leads to waste risk. Furthermore, the specific risks in production entail the mixing process; the fixed shift of personnel which makes it difficult to determine who did fraud if fraud is committed; the hourly wages plus bonus since employees can lie about the amount processed; inadequate waste handling during production; and the risk of recording bricks as lower quality while being of high quality and selling these for the price of high quality bricks and keeping the difference. The last...