Assignment 4: Letsgo Travel Trailer

Coachman industries, a direct Letsgo competitor has reduced its material cost by more than 60% and labor cost by 78% by using creative engineering and high accuracy analysis. On the other hand, the Letsgo Travel Trailer Company is experiencing challenges with quality, cash flow and a performance review and reward system. This is happening due to lack of integrative planning across different functions. Each functional unit is trying to maximize their own performance, which in turn is hampering the overall performance. The current appraisal and reward system is increasing this isolated and non-cooperative working of the different functional units.

▪ The sales department to improve their sales want to have high finished goods inventory

▪ The production department wants to have high inventory of raw material to have uninterrupted production schedule. They are not interested in implementation of Just-in-time inventory methods to reduce the overall cost.

▪ The current control and reporting system does not provide enough good quality data to guide management decision process. For example, no record for work in process is kept in the company.

▪ The accounts department is making the budget without getting any information from functional units. This way the budgets are not realistic and reflect only an accounting necessity rather than a decision making and control tool.

▪ The cash management system of the company is not good and company is facing the cash management problems.

Validity and Reasonableness of Letsgo’s Sales Projections:

Table-1: Actual and Projected Sales Growth
| |Sales |% Increase |
|1992 |13,765 | |
|1993 |14,880 |8.10% |
|1994 |15,991 |7.47%