Question

The normal variance for filling a liter Coke bottle is 0.5 ounces. In a recent measurement, variance was found to be 0.8 ounces. Should Coca-Cola's management be concerned? Discuss why or why not. In replies to peers, provide an example to support your position.

Answer 1

Answer :

Yes, Coca-Cola management should be concerned of excess loss. Because if variance of 0.3 ounces i.e.(0.8-0.5) is coming in filling a litre coke bottle then it can lead to huge losses when it comes to manufacturing of millions of bottels. The more the loss more the price of per litre of Coke bottle. Moreover apart from excess loss of 0.3 ounces it will damage the goodwill of coca-cola as it will give sense of disatisfaction to customers as they get more quantity of same product of different companies(like Pepsi etc.) at a lesser price. Abnormal variance is an avoidable cost which can be avoided by taking corrective actions, so Coca-Cola should aim for taking corrective actions.

Ways of minimizing variance loss of 0.3 ounces a litre Coke bottle and this ways can also be explained to peers which will act as an reply to them :-

• Proper machinery is installed.
• Proper training and guidelines regarding operating of machine is given to emloyees/workers.
• Regular checks of volume and inventoy of Coke bottles should be taken into consideration.
• Competent and professional staff is employed in the workline where production of Coca-cola is done

*Example :- Suppose if the employees are trained and all the corrective actions are taken than abnormal losses can be minimized. from 0.8 ounces to 0.5 ounces which is a normal loss.