Homework Help is Here – Start Your Trial Now!
Engineering
Computer Engineering
1. How could the problem with the "phantom inventories" have been avoided? 2. What kind of incentives would have discouraged the activities discussed in this vignette?

1. How could the problem with the "phantom inventories" have been avoided? 2. What kind of incentives would have discouraged the activities discussed in this vignette?

Computer Networking: A Top-Down Approach (7th Edition)
Computer Networking: A Top-Down Approach (7th Edition)
7th Edition
ISBN:9780133594140
Author:James Kurose, Keith Ross
Publisher:James Kurose, Keith Ross
Chapter1: Computer Networks And The Internet
Section: Chapter Questions
Problem R1RQ: What is the difference between a host and an end system? List several different types of end...
See similar textbooks
icon
Related questions
Question
100%
Vignette 6.2 UNAUTHORIZED ACCESS TO DATA At a motel furnishings retailer with $300 million in annual sales, quarterly bonuses for product managers depended primarily on sales contracts signed. A product manager was responsible for credenzas, for example, and might carry as many as two dozen styles that were available from six different manufacturers. The retailer's primary customer was a major motel chain. Sales contracts with the motel chain called for supplying most of the more than 500 different items of furniture and equipment needed to open a new or remodeled motel. The typical sales contract ran about 1 year from the signing of the contract to the delivery of the furnishings in the last 30 days before the opening Of a motel. The timing Of deliveries was critical because it most efficient to unload directly from the trucks into the motel. However, most motel projects ran into some delays, causing deliveries to be made to temporary warehouses in the city where the motel was located. The retailer also maintained inventory at warehouses in its headquarters' city. Although most furnishings were drop-shipped from the manufacturer to the motel site, some inventory wound up in possession of the retailer because of mistakes in style, timing errors, and closeouts of particular manufacturers. Product managers would buy as many as 1 ,000 units of the most popular product styles. Upon completion of production, the manufacturer would ship any items needed at motel sites and store the remainder until the retailer needed to have the items delivered to other motel sites. All inventory,whether located in a warehouse at the motel site or at headquarters or held by the manufacturer for later delivery, was the property of the motel furnishings retailer. The accounting system that handled the very complex mix of products and contracts was programmed to refuse a sales order for any product unless the product was in inventory or was on order for availability before the proposed delivery date on the particular sales contract. Management felt this refusal feature would force product managers to better manage their product line inventories. During the physical inventory at close of the fiscal year, an $11,000.000 inventory shortage was identified. After substantial and costly rechecking, it was found that product managers had discovered that no internal controls were in place to prevent them from entering data that indicated products were on order when, in fact, they were not. By entering "phantom inventory," with availability dates to match immediate needs, the system would accept sales contracts and increase the product managers' bonuses. Thought Questions: I. How could the problem with the "phantom inventories" have been avoided? 2. What kind of incentives would have discouraged the activities discussed in this vignette?
Transcribed Image Text:Vignette 6.2 UNAUTHORIZED ACCESS TO DATA At a motel furnishings retailer with $300 million in annual sales, quarterly bonuses for product managers depended primarily on sales contracts signed. A product manager was responsible for credenzas, for example, and might carry as many as two dozen styles that were available from six different manufacturers. The retailer's primary customer was a major motel chain. Sales contracts with the motel chain called for supplying most of the more than 500 different items of furniture and equipment needed to open a new or remodeled motel. The typical sales contract ran about 1 year from the signing of the contract to the delivery of the furnishings in the last 30 days before the opening Of a motel. The timing Of deliveries was critical because it most efficient to unload directly from the trucks into the motel. However, most motel projects ran into some delays, causing deliveries to be made to temporary warehouses in the city where the motel was located. The retailer also maintained inventory at warehouses in its headquarters' city. Although most furnishings were drop-shipped from the manufacturer to the motel site, some inventory wound up in possession of the retailer because of mistakes in style, timing errors, and closeouts of particular manufacturers. Product managers would buy as many as 1 ,000 units of the most popular product styles. Upon completion of production, the manufacturer would ship any items needed at motel sites and store the remainder until the retailer needed to have the items delivered to other motel sites. All inventory,whether located in a warehouse at the motel site or at headquarters or held by the manufacturer for later delivery, was the property of the motel furnishings retailer. The accounting system that handled the very complex mix of products and contracts was programmed to refuse a sales order for any product unless the product was in inventory or was on order for availability before the proposed delivery date on the particular sales contract. Management felt this refusal feature would force product managers to better manage their product line inventories. During the physical inventory at close of the fiscal year, an $11,000.000 inventory shortage was identified. After substantial and costly rechecking, it was found that product managers had discovered that no internal controls were in place to prevent them from entering data that indicated products were on order when, in fact, they were not. By entering "phantom inventory," with availability dates to match immediate needs, the system would accept sales contracts and increase the product managers' bonuses. Thought Questions: I. How could the problem with the "phantom inventories" have been avoided? 2. What kind of incentives would have discouraged the activities discussed in this vignette?
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Computer Networking: A Top-Down Approach (7th Edi…
Computer Networking: A Top-Down Approach (7th Edi…
Computer Engineering
ISBN:
9780133594140
Author:
James Kurose, Keith Ross
Publisher:
PEARSON
Computer Organization and Design MIPS Edition, Fi…
Computer Organization and Design MIPS Edition, Fi…
Computer Engineering
ISBN:
9780124077263
Author:
David A. Patterson, John L. Hennessy
Publisher:
Elsevier Science
Network+ Guide to Networks (MindTap Course List)
Network+ Guide to Networks (MindTap Course List)
Computer Engineering
ISBN:
9781337569330
Author:
Jill West, Tamara Dean, Jean Andrews
Publisher:
Cengage Learning
Concepts of Database Management
Concepts of Database Management
Computer Engineering
ISBN:
9781337093422
Author:
Joy L. Starks, Philip J. Pratt, Mary Z. Last
Publisher:
Cengage Learning
Prelude to Programming
Prelude to Programming
Computer Engineering
ISBN:
9780133750423
Author:
VENIT, Stewart
Publisher:
Pearson Education
Sc Business Data Communications and Networking, T…
Sc Business Data Communications and Networking, T…
Computer Engineering
ISBN:
9781119368830
Author:
FITZGERALD
Publisher:
WILEY
SEE MORE TEXTBOOKS