Table 1 shows performance at NovaGlow, a manufacturer of refillable desk lamps. The directors set three objectives at the beginning of the year after custom...
Question 1 Report
Table 1 shows performance at NovaGlow, a manufacturer of refillable desk lamps. The directors set three objectives at the beginning of the year after customers reported concerns about product reliability. They now need to decide whether the objectives have been achieved and which area should receive management attention.
| Objective | Target | Actual result |
|---|---|---|
| Annual sales revenue | $480 000 | $456 000 |
| Faulty lamps returned | 2% or less | 1.5% |
| Manufacturing waste | Reduce by 12% | Reduce by 7% |
(a) Identify the objective that NovaGlow achieved. [1]
(b) Show the shortfall in annual sales revenue. [2]
(c) Explain why reducing faulty products may help NovaGlow meet a sales objective in the future. [2]
Answer Details
(a) The objective achieved was reducing faulty lamps returned to \(2\%\) or less. [1] The actual return rate was \(1.5\%\), which is below the maximum target.
(b) Sales revenue shortfall:
\[\$480\,000-\$456\,000=\$24\,000\]
Sales revenue was \(\$24\,000\) below target. [2]
(c) Fewer faulty lamps improve customer satisfaction and the business's reputation. [1] Customers may then make repeat purchases or recommend NovaGlow to others, increasing future sales. [1]
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