GamesDev Pty Ltd is a 20-year-old company engaged in the manufacture and sale of toys and board games. The company has built a reputation on quality and innovation. Although the company is one of the leaders in its field, sales have levelled off in recent years. For the most recent six-month period, sales actually declined compared with the same period last year. The production manager, John Smith, attributed the lack of sales growth to 'the economy'. He was prompted to undertake several belt tightening moves that included cuts in production costs and layoffs in the design and product development departments. Although profits are still flat, he believes that within the next six months, the results of his decisions will be reflected in increased profits.

The Vice President of Sales, Michael Jordan, has been concerned with customer complaints about the company's realistic line of working model factories, farms and service stations. The moving parts on certain models have become disengaged and failed to operate, or they operate erratically. His assistant, Peter McNally, has proposed a trading programme through which customers can replace malfunctioning models with new ones. McNally believes this will demonstrate goodwill and appease dissatisfied customers. He has also proposed rebuilding the trade-ins and selling them at discounted prices in the company's retail outlet store. He doesn't think this will take away from sales of new models. Under McNally's programme, no new staff would be needed. Regular workers would perform needed repairs during periods of seasonal slowdowns, thus keeping production at current levels.

When Steve Markovic a production assistant, heard Peter's proposal, he said that a better option would be to increase inspection of finished models before they were shipped. "With 100% inspection, we can weed out any defective models and avoid the problem entirely".

Take the role of a consultant who has been called in for advice by the company, President, Shirley Johnston. What do you recommend?