The company Lavadoras Maqui, S.A., has two managers, one of Purchasing and one of Production with totally different and well specified functions. The Purchasing Department is responsible for purchasing raw materials and supplies at the lowest cost and with the quality established by quality control. On the other hand, Production is responsible for achieving the programmed levels of production and at minimum cost. Due to certain economic events in the country, the raw material used in Maqui washing machines has a very fluctuating price, which forces the purchasing manager to take advantage when the price falls, acquiring large volumes to protect against possible increases in the price of raw materials. Faced with this situation, the production manager complained because he says that this purchasing policy affects his area, stating that:

On some occasions, the purchasing department has caused bottlenecks, because it has no material; because it is waiting for the price to go down to make its purchases.

The efficiency has been reduced because in some occasions, of so many raw materials that is had, the stockiest does not find what is asked of him and must go to people of production to help him to locate it.

The production manager states that this purchasing policy must be corrected and that adequate levels of raw material must be maintained regardless of when they are purchased.

It is requested:

1. How would this conflict be resolved?
2. How can a better liability system be designed to avoid these drawbacks?