After graduation, you obtain a customer service manager position with an automotive parts company. Your new duties include managing all customer freight shipment claims regarding product deliveries. Customers order automotive body parts, such as bumpers or hoods, which are shipped to them from your warehouse. The average cost of an order is between $400 and $700. Upon delivery, customers inspect the package and sign a delivery document stating that the shipment contains all ordered parts in good condition. Missing or damaged products are immediately replaced or refunded.

Sometime customers sign when the package is received without first inspecting the contents. When this happens, if the product is damaged, the customer has 7 days within receipt of delivery to file a damaged goods claim with pictures documenting the damage. It is your duty to determine if the product was damaged when it left your warehouse, by the delivery carrier, or by the customer after delivery.

While conducting a thorough review of operations, you realize the previous manager never filled 200 documented damage claims that were received between 3 and 9 months ago, which totals $120,000 in damaged product. There is also no documentation that any of these customers complained about not getting a refund. Since the delivery company sent these claims to your company within the 7-day limit, but they were not entered into your system, you cannot charge any of these damages to the carrier even if that is where the damage occurred. Therefore, funds to pay for these refund claims will have to come out of this quarter's profits, which would reduce anticipated quarterly bonuses.

What would you do?

a/. Send refunds to all 200 customers who submitted a damage claim, which will cost the company $120,000

b/. Send refunds only to customers who eventually complain about not being reimbursed yet

c/. Something else (if so, what?)