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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Strategic Cost & Performance Management

Case: Malabar Textiles Ltd, Kochi, is deciding between a value-added and non-value-added classification in a value chain review. Which activity is best treated as non-value-added from the customer's perspective?

Repeatedly moving semi-finished goods between distant storage areas is non-value-added. It consumes time and cost but does not change the product features the customer pays for, whereas stitching, dyeing and design all add value, so only material handling waste is a candidate for elimination.

  1. AStitching the garments to specification
  2. BDyeing fabric to the customer's colour
  3. CMoving semi-finished goods repeatedly between distant storage areasCorrect
  4. DQuality design of the fabric pattern

Explanation

Non-value-added activities consume resources without increasing what the customer values. Repeated internal movement and storage adds cost but no customer benefit. Stitching, dyeing and design directly change the product features customers pay for.

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