Toys (cyprus) ltd. | Operations Management homework help

Toys (Cyprus) Ltd.

Toys Ltd. was established in 1990 in a provincial town close to Larnaca in Cyprus with the stated 

objectives of producing high quality toys and educational equipment for principally, the Cyprus 

market and later the middle-east. Over the period of 20 years it has seen various ups and downs in 

fortune but has been facing increasing competition especially in the education segment of its 

business.

Recently it has experienced a downturn in its profitability which its management ascribe to the 

deteriorating economic markets in Europe and the ”knock on” effect in the Cyprus market. Various 

strategies to overcome this deterioration in its sales and profits have been proposed and cuts in the 

employee force and production techniques have been proposed. The management consider that 

these strategies together with more stringent cost controls and cost cutting will produce the desired 

results in the future.

One of the factors reported by the sales director, Kyriacos Dmitriou, is the increasing number of 

returns being received by the goods returned department. This phenomenon he says, “….. is not 

sustainable if the firm is to return to profitability. “

The production manager has suggested that if 100% of items produced are inspected at the end of 

the production line then the problem of returns of defectives will be solved. This operation could be 

achieved by moving 2 or 3 of the more experienced workers from the assembly line and onto final 

quality inspection. Again, this strategy would not involve changes in staff numbers. It has also been 

suggested by the production department that a higher degree of self assembly by the 

customers/consumers could be used as this would again reduce production costs and place the onus 

of the defectives issue on the consumers.

The Marketing Director, Stavrou Kiriacou, is concerned that so many items with working parts are 

being returned due to erratic or non-working parts. He is concerned that this will affect the 

reputation and image of the firm. His senior assistant has proposed that as a measure of good will 

the firm agrees to receive faulty goods back and replace them with new items. This, he says, will 

cure the image problems. He also suggests that the faulty units could be rebuilt and repaired then 

sold in the outlet shop. These could be sold at a compensating discount. He believes also that this 

would not detract from the sales of new items. Under this strategy no extra staff would be needed 

as regular staff could carry out the functions during lulls in their regular work.

It has been suggested by the accountants that the company should be looking for cheaper

components even if they are considered lower quality as this would satisfy the company’s need for 

cost reduction in production. With the change in staff organisation, cheaper components, cheaper 

materials, rebuilding products and sales in outlets the returns problems and profit levels would be 

addressed. The accountants have asked for more accurate figures of returns, defectives, fault points 

and total production volume figures are provided to them. It could be they say, that the levels of 

returns are at acceptable levels. After all they claim, the percentage “defectives” may well be within 

the parameters laid down in industry standards and bench marks.

Additionally, the accountants have queried if the firm can afford to choose strategies other than 

those they have proposed:

a)buying cheaper components and materials

b)working to industry norms on defectives and acceptance levels

c)”toughing” it out as far as returns are concerned by denying liability and resisting compensation by 

replacement of defective products.

Operations Management – Assessment 2 – Toys (Cyprus) Ltd. – Case study

You have been requested to provide advice and justified recommendations, as a new graduate of 

management studies, to the management of TOYS (Cyprus) Ltd. regarding their problems with their 

products and processes. They are particularly interested in your observations regarding their 

proposals to overcome their poor performance in the markets they are in.

They have asked that you provide them with justified reasons for recommendations.

You are to write your recommendations, findings and observations with fully justified arguments.

Guidelines for assignment 

 This is an individual assignment 

 Plagiarism and reproduction of someone else’s work as your own will be penalized 

 Make use of references, where appropriate – Use Harvard referencing method. 

 Structural elements should include an introduction, main body, and a conclusion 

 Weight – 50% 

 All of the following questions are to be attempted. 

 Maximum word count: 2000 words 

 Type of assignment: Essay 

 Deadline : Week 6

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