Aloha Products - 1

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Assignment on Case Study

Aloha Products

Q1. Evaluate the current control systems for the manufacturing, marketing and purchasing departments of Aloha Products.

Solution:
From the case we can see that Aloha products is structured on a cost basis; however the control system is attempting to measure each plant on a profit basis. Thus the company have a centralized control system. This means that the main office takes all the main decisions regarding purchases, production, sales, marketing and promotions in order to save costs. However, the plant managers are responsible for their profit and loss and are evaluated on the basis of their performance despite lack of adequate control over the activities by managers of the managed plant. This type of structure is an unfair way of measuring the performance of the individual production plants.

Based on the current system evaluating the three major departments of Aloha Products are described below:

Evaluation of manufacturing departments:
There are three production plants within AP’s manufacturing department; each plant is responsible for their own profits and losses. Unfortunately the managers have no control over any of the major activities in their respective production facilities; the vice president of the manufacturing oversees all of the roasting, grinding, and packaging processes. Production schedules are provided to each plant manager for the current and following month. The plant managers also have no control over the green beans purchase, production schedule, production mix, or the costs of their inputs, as the purchasing departing assigns the costs based on specific contract for that shipment. If the inputs exceeded plant’s requirements, they are sold at the spot rate in the market, and could very well result in a loss.

Evaluation of purchasing departments:
The purchasing department is responsible for obtaining the required

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