As we continue with this case, assume that your company has been using a continuous manufacturing process to make chocolate chip cookies. Demand has been so great that the company has built a special plant that makes only custom ordered cookies. The cookies are shaped by machines but vary according to the customer’s specific instructions. Ten basic sizes of cookies are produced and then customized. Slight variations in machine setup produce the different sizes.

In the past six months, several problems have developed. Even though a computer controlled machine is used in the manufacturing process, the company’s backlog is growing rapidly, and customers are complaining that delivery is too slow. Quality is declining because cookies are being pushed through production without proper inspection. Working capital is tied up in excessive amounts of inventory and storage space. Workers are complaining about the pressure to produce the backlogged orders. Machine breakdowns are increasing. Production control reports are not useful because they are not timely and contain irrelevant information. The company’s profitability and cash flow are suffering.

Assume that you have been appointed CEO and that the company has asked you to analyze its problems. The board of directors asks that you complete your preliminary analysis quickly so that you can present it to the board at its midyear meeting.

1. In memo form, prepare a preliminary report recommending specific changes in the manufacturing processes.

2. In preparing the report, answer the following questions:

a. Why are you preparing the report? What is its purpose?

b. Who is the audience for this report?

c. What kinds of information do you need to prepare the report, and where will you find it (i.e., what sources will you use)?

d. When do you need to obtain the information?