Zink Company manufactures a high-tech component that passes through two production processing departments, Molding and Assembly. Department managers are partially compensated on the basis of units of products completed and transferred out relative to units of product put into production. This was intended as encouragement to be efficient and to minimize waste.

Sara Jones is the department head in the Molding Department, and Frank Smith is her quality control inspector. During the month of June, Sara had three new employees who were not yet technically skilled. As a result, many of the units produced in June had minor molding defects. In order to maintain the department's normal high rate of completion, Sara told Frank to pass through inspection and on to the Assembly Department all units that had defects nondetectable to the human eye. "Company and industry tolerances on this product are too high anyway," says Sara. "Less than 2% of the units we produce are subjected in the market to the stress tolerance we've designed into them. The odds of those 2% being any of this month's units are even less. Anyway, we're saving the company money."

Required:

1. Who are the stakeholders involved?
2. What alternatives does Frank have in this situation?
3. What might the company do to prevent this situation from occurring?