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The owner of a small food products company was confronted with an inventory control problem involving differences of opinion among his subordinates. His accountant, with the support of his general manager, had decided to “put some teeth” into the inventory control system by deducting inventory shortages from the pay of route drivers who distributed the firm's products to stores in their respective territories. Each driver was considered When the first “short” paychecks arrived, drivers were angry. Sharing their concern, their immediate supervisor, the regional manager, first went to the general manager and then, getting no satisfaction there, appealed to the owner. The regional manager argued that there was no question about the honesty of the drivers. He said that he personally had created the inventory control system the company was using, and he admitted that the system was complicated and susceptible to clerical mistakes by the driver and by the office. He pointed out that the system had never been studied by the general manager or the accountant, and he maintained that it was ethically wrong to make deductions from the small salaries of honest drivers for simple record-keeping errors. Question 1 What is wrong, if anything, with the general manager's approach to making sure that drivers do not steal or act carelessly? Is some method of enforcement necessary to ensure careful adherence to the inventory control system? Question 2 Is it wrong to deduct from drivers' pay-checks shortages documented by inventory records? Question 3 How should the owner resolve this dispute?

The owner of a small food products company was confronted with an inventory control problem involving differences of opinion among his subordinates. His accountant, with the support of his general manager, had decided to “put some teeth” into the inventory control system by deducting inventory shortages from the pay of route drivers who distributed the firm's products to stores in their respective territories. Each driver was considered When the first “short” paychecks arrived, drivers were angry. Sharing their concern, their immediate supervisor, the regional manager, first went to the general manager and then, getting no satisfaction there, appealed to the owner. The regional manager argued that there was no question about the honesty of the drivers. He said that he personally had created the inventory control system the company was using, and he admitted that the system was complicated and susceptible to clerical mistakes by the driver and by the office. He pointed out that the system had never been studied by the general manager or the accountant, and he maintained that it was ethically wrong to make deductions from the small salaries of honest drivers for simple record-keeping errors.

Question 1 What is wrong, if anything, with the general manager's approach to making sure that drivers do not steal or act carelessly? Is some method of enforcement necessary to ensure careful adherence to the inventory control system?

Question 2 Is it wrong to deduct from drivers' pay-checks shortages documented by inventory records? Question 3 How should the owner resolve this dispute?

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