R. B. Dillman Company manufactures a high-tech component used in Bluetooth speakers that passes through two production processing departments, Molding and Assembly. D

R. B. Dillman Company manufactures a high-tech component used in Bluetooth speakers that passes through two production processing departments, Molding and Assembly. Department managers are partially compensated on the basis of units of product completed and transferred out relative to units of product put into production. This was intended as encouragement to be efficient and to minimize waste.

Jan Wooten is the department head in the Molding Department, and Tony Ferneti is her quality control inspector. During the month of June, Jan hired three new employees who were not yet technically skilled. As a result, many of the units produced in June had minor molding defects. In order to maintain the department’s normal high rate of completion, Jan told Tony to pass through inspection and on to the Assembly Department all units that had defects nondetectable to the human eye. “Company and industry tolerances on this product are too high anyway,” says Jan. “Less than 2% of the units we produce are subjected in the market to the stress tolerance we’ve designed into them. The odds of those 2% being any of this month’s units are even less. Anyway, we’re saving the company money.”

Instructions

Who are the potential stakeholders involved in this situation?

What alternatives does Tony have in this situation? What might the company do to prevent this situation from occurring?