Precision worldwide case study solutions

Henk strongly opposed the sale of any steel rings once plastic ones become available. Although there will be competitors selling other plastic rings, they will be few and far between.

PWI will be one of the first companies to sell it therefore obtaining more of the market share and becoming a leader in this field. One of the reasons that Precision Worldwide, Inc.

Cns worldwide case solution

Recommendations: Precision Worldwide, Inc. The remaining 15, steel rings will have to be calculated as a sunk cost. Although there will be competitors selling other plastic rings, they will be few and far between. There are four key assumptions to this option: First, this market follows the law of supply and demand meaning that by lowering the price of steel rings, the demand for rings increases to a point where Precision Worldwide can sell its entire on-hand inventory. If Precision Worldwide did nothing to market price and sold steel rings at the current demand rate rings a week for 14 weeks , total rings sold would be x Cost of finished steel rings and unused special steel inventories PWI currently possess large quantity of steel rings on hand and substantial inventory of special steel. Since they are stronger and more durable than the steel rings, less plastic rings will be purchased. He also has to come to a decision regarding the materials that have been obtained for inventory but PWI did not have the chance to actually process them before the change was made. Fortunately for PWI that the profit margin is high enough to offset the quantities of plastic rings that are sold. PWI manufactures industrial machines and equipment for sale in numerous countries. After a thorough survey, Hans Thorborg had found out that the special steel could not be sold, even for scrap. In the meantime they should start producing, selling, and distributing plastic rings to their entire market of customers while attracting new customers who may prefer this new option. Table A-1 Plastic Rings vs. There would be sunk costs that would ultimately come from the failure of PWI to sell back the specialized steel because of the same features that make thesteel unique would in the end be the reason that they are difficult to resell.

In this case, it would be prudent to disregard the fixed costs because the firm should be concerned with future cash flows not past costs. PWI then needs to sell the remaining steel rings to at least recoup some of their initial investment.

Cns worldwide case study solution

There are four key assumptions to this option: First, this market follows the law of supply and demand meaning that by lowering the price of steel rings, the demand for rings increases to a point where Precision Worldwide can sell its entire on-hand inventory. Objective To minimize losses associated with steel retaining To maintain lucrative revenue stream from retaining rings market. During the production phase of the new plastic rings, PWI can try to sell all of the remaining steel rings that they have in stock. The sale and distribution of the plastic rings should begin immediately after to all of their branches so that way PWI can start earning profits as quickly as possible. Related Papers. By immediately stopping production of the steel rings PWI will lose quite a bit of money, but in the long run they will be able to bring in a larger profit and more clientele with the production of the plastic rings. Additionally, the plastic ring is less costly to manufacture.

With this new product offering, PWI will be able to acquire new clientele across the globe and still be able to maintain the loyalty of their existing patrons.

The sooner the company is able to sell plastic rings, the sooner they will be able to realize the increased profit margins associated with that product.

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Precision Worldwide, Inc.