Plot hole: No amusement park ride company would ever produce a prop scythe that was as sharp as depicted in the movie.
Plot hole: At some point during the war games exercise, headquarters would have eventually discovered Sgt. Botnick's body, and then they would have immediately stopped the exercise.
Plot hole: There is no way a military academy wouldn't teach their students the first rule of using a firearm: when you are given a firearm, you must always check if it is loaded and what kind of bullets it has. So there is no way Chucky could have switched the paintball shells with real bullets without someone noticing.
Answer: The public believes that the Good Guy doll that committed the murders had simply malfunctioned, which caused great negative publicity for the company. The public does not believe Andy or his mother's claims that the doll was possessed by a serial killer and was actually alive. In Child's Play 2 the company finds and reassembles the doll to prove to shareholders that the Good Guy doll is safe. This backfires and the doll is re-possessed, which leads to additional murders in that film crippling the company for 8 years.
BaconIsMyBFF