In: Accounting
It was spring 2019 when John Edgeworth was a project manager at Kreative Toy Corporation (KTC) submitted a proposal for funding to the recently established product review committee. He was proposing that KTC introduce through its distribution channels a new toy based on a popular cartoon character. John felt that Kreative could get this new product out for Christmas, Kreative could take advantage of the strong market for gift giving. John also knew that the toy market was very volatile and these types of toys may only last one season, so he felt the committee needed to approve the proposal quickly to ensure that the product would be ready for the Christmas season. John looked at the calendar on his desk which read Monday, May 11, 2019, and knew it the proposal was approved he would have to manage the project very carefully to meet the delivery date he put in the proposal of September 18, 2019, just nineteen weeks away.
Headquartered in Mississauga, Ontario where Kreative had both a manufacturing facility and its distribution centre. Creative was proud of the fact that could produce a wide variety of products in their Mississauga plant and had a preference for manufacturing products in-house.
John expected to receive approval and feedback from the committee by the end of the week, at which time he would earnestly start co-ordinating the product plan. As John was an experienced project manager he created a preliminary list of activities, as shown in Exhibit A attached.
Based on the schedule John created, he felt he could begin to work on some of the activities immediately. He felt he could finalize the product design and placing an order for the new equipment required. This being said, John realized that many of the activities had to be performed sequentially, as an example John could not train workers on the new equipment until it was installed and the tooling for the machine was complete. He also knew he could not order the raw materials until the engineering work was complete and an advertising plan was complete, as the advertising plan would influence the colour selection of the new toy.
John was concerned about the delivery schedule and investigated opportunities to cut the project time. He went to speak to the Marketing Manager, Cicely Carmichael, who told him after looking at his plan that she could probably reduce the product advertising, but she also told him that she anticipated a reduction in sales of three percent for each week of “lost” advertising. Cicely also told John that on a new product he could not get away with anything less than six weeks of advertising for the new product. She further said that she would have to double up on the amount of advertising during those six weeks and that would mean the advertising budget would not change.
After discussing the plan with Cicely, John went to speak with the Production Manager in the tool shop, Jeffrey Lynch. Lynch offered to speed up the tool build by working extra hours, most likely on weekends but the additional cost would add $5,500.00 to the budget. Jeffrey felt if this extra cost was approved by Edgeworth, he could improve delivery time by two weeks.
Exhibit A
Activities Needed for a New Product Introduction
Activity |
Description |
Immediate Predecessor |
Estimated Time (in Weeks) |
A |
Obtain Funding Approval |
1 |
|
B |
Finalize Engineering |
A |
1 |
C |
Delivery of New Equipment |
A |
8 |
D |
Build dies/tools |
B |
12 |
E |
Install Equipment |
C |
1 |
F |
Train Workers |
D, E |
1 |
G |
De-Bug Process |
F |
1 |
H |
Establish an Advertising Plan |
A |
1 |
I |
Finalize Package and Artwork |
H |
2 |
J |
Advertise |
H |
12 |
K |
Raw Material Delivery |
D, I |
2 |
L |
Initial Production Run |
G, K |
3 |
M |
Ship Product |
J, L |
1 |
Creative Toy Corporation Case Study
The fundamental cause questions to be answered:
If the project cannot be completed on time, what can you do? Please explain your decision
Well, as per the time and schedule the product should be in the market before the Christmas and the prime intention behind this date is to grab the lion share of toy market. As per the current circumstances it seems a herculean task for the company to get their product out for sale before Christmas since the time required for advertising and tool build taking almost 12 weeks, which is not acceptable in the current situation. In order to make the delivery on time the company should outsource their production since company can only provide training to the workers only when new machines are installed and also there is a delay in ordering raw materials due to the incomplete engineering work. So If the the company outsource their product they can cut their time in large extent and can deliver the product to the market on time.
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