Precision Worldwide Case: What are the decision problem and the goal of the decision? Which is more
Fantastic news! We've Found the answer you've been seeking!
Question:
Precision Worldwide Case:
- What are the decision problem and the goal of the decision?
- Which is more profitable, steel or plastic rings?
- From your initial reading of the case, what would you do?
- What actions should Hans Thorborg take? Why?
Transcribed Image Text:
In late May 2004, Hans Thorborg, the general manager of the German plant of Precision Worldwide, Inc. (PWI), scheduled an afternoon meeting with his sales manager, accountant, and development engineer to discuss the introduction by the French firm Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The plastic ring, new to the market, not only had a much longer life than the PWI steel ring but also apparently had a much lower manufacturing cost. Thorborg's problem stemmed from PWI's large quantity of steel rings on hand and the substantial inventory of special steel that had been purchased for their manufacture. After a thorough survey, he had found that the special steel could not be sold, even for scrap; the total book value of these inventories exceeded $390,000. For nearly 90 years PWI had manufactured industrial machines and equipment for sale in numerous countries. The particular machines involved in Thorborg's dilemma were made only at the company's plant in Frankfurt, Germany, which employed more than one thousand people. The different models were priced between $18,900 and $28,900 and were sold by a separate sales organization. Repair and replacement parts, which accounted for a substantial part of the company's business, were sold separately. As with the steel rings, these parts could often also be used on similar machines manufactured by competitors. The company's head office was in Toledo, Ohio, U.S.A. In general, plants outside the United States were allowed considerable leeway in administering their own affairs; the corporate headquarters, however, was easily accessible by telephone, email, or during executive visits to the individual plants. In the late 1990s, competition had increased. Japanese manufacturers, with low-priced spare parts, had successfully entered the field. Other companies had appeared with lower-quality and lower-priced machines. There was little doubt that future competition would be more intense. The steel ring manufactured by PWI had a normal life of about two months, depending upon the extent to which the machine was used. A worn-out ring could be replaced in a few seconds, and although different models of the machines required from two to six rings, the rings were usually replaced individually as they wore out. In late May 2004, Hans Thorborg, the general manager of the German plant of Precision Worldwide, Inc. (PWI), scheduled an afternoon meeting with his sales manager, accountant, and development engineer to discuss the introduction by the French firm Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The plastic ring, new to the market, not only had a much longer life than the PWI steel ring but also apparently had a much lower manufacturing cost. Thorborg's problem stemmed from PWI's large quantity of steel rings on hand and the substantial inventory of special steel that had been purchased for their manufacture. After a thorough survey, he had found that the special steel could not be sold, even for scrap; the total book value of these inventories exceeded $390,000. For nearly 90 years PWI had manufactured industrial machines and equipment for sale in numerous countries. The particular machines involved in Thorborg's dilemma were made only at the company's plant in Frankfurt, Germany, which employed more than one thousand people. The different models were priced between $18,900 and $28,900 and were sold by a separate sales organization. Repair and replacement parts, which accounted for a substantial part of the company's business, were sold separately. As with the steel rings, these parts could often also be used on similar machines manufactured by competitors. The company's head office was in Toledo, Ohio, U.S.A. In general, plants outside the United States were allowed considerable leeway in administering their own affairs; the corporate headquarters, however, was easily accessible by telephone, email, or during executive visits to the individual plants. In the late 1990s, competition had increased. Japanese manufacturers, with low-priced spare parts, had successfully entered the field. Other companies had appeared with lower-quality and lower-priced machines. There was little doubt that future competition would be more intense. The steel ring manufactured by PWI had a normal life of about two months, depending upon the extent to which the machine was used. A worn-out ring could be replaced in a few seconds, and although different models of the machines required from two to six rings, the rings were usually replaced individually as they wore out.
Expert Answer:
Answer rating: 100% (QA)
Current Situation Precision Worldwide Incs PWI business model is manufacturing industrial machines and equipment worldwide In addition to manufacturing industrial machines and equipment PWI generates ... View the full answer
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Posted Date:
Students also viewed these finance questions
-
A research firm tracks the average highway speed of 30 drivers driving home on Day 1. For the next 10 days, the drivers are given two cups of coffee 1 hour before the drive home. On the 10th day, the...
-
From the standpoint of a lender, which is more attractive: a high times interest earned ratio or a low times interest earned ratio? Explain.
-
From the standpoint of a lender, which is more attractive: a high times interest earned ratio or a low times interest earned ratio? Explain. Discuss.
-
Jim Redman purchased a car from Bill Branch Chevrolet. However, the car had been reported stolen and Jim was unable to secure a good title. Redman sued Bill Branch Chevrolet on the breach of the...
-
A. We should focus on these 2 markets for now. B. We should focus on seven of the fifteen geographic regions. C. 15 regions will have new supervisors as of June 20th, 2016. D. Each purchase above 500...
-
What issues are accountants concerned with when determining their preference for CASE tools that convert structure diagrams into machine code or source code? What are the costs associated with each?
-
Identify the most appropriate approach and then design. Provide a rationale as to why this approach and design would be most appropriate. Develop a hypothetical research scenario that would...
-
Pratt Agriculture sells approximately 600,000 bushels of grain each month. On January 1, 2011, Pratt purchased an option to sell 600,000 bushels of grain on January 1, 2013, at a price of $1.25 per...
-
Two years after the first round XMP GmbH receives a second offer form B-Capital. B-Capital offers to invest 12,500,000.00 at a 60,000,000.00 pre-money valuation. What is the founders' post-round...
-
To: [Your name] From: Supervising Attorney Re: Commonwealth v. Clavel; execution of search warrantunannounced entry We represent Darren Clavel in the case of Commonwealth v. Clavel. In this case,...
-
If, at the prevailing price level, the aggregate quantity supplied exceeds the aggregate quantity demanded, the price level will tend to fall. True or False True False
-
It takes a kukui kernal 8-9 minutes to burn completely. It takes 35 kernels to fill one small baby food jar (4 ounces) with the soot, called pau in Hawaiian. The pau is then mixed with pilali (kukui...
-
Conclusion and findings about the company name is Target which is a department store chain Questions four and five should be addressed as the conclusion and findings. The questions are: how might the...
-
Examination of existing software Two (2) existing software in the market. Features of each software and their suitability for the financial management of the Online Media Solutions.
-
A rigid beam of length 490 cm and uniform mass 89 kg suspends two masses on light strings at each end as shown in the figure. If mass m = 33 kg and m2 = 49 kg, at what distance x should the pivot be...
-
Q7 Algebraically, find the inverse of the following function 2y+6=8(x+3)
-
In this lab, we will use the Java collections framework to write classes that represent collections of playing cards from a standard 52-card deck. Additionally, we will use enumeration types to...
-
We all experience emotions, but some people disguise their true feelings better than others. Do you think this is a helpful or harmful thing to do? Under what conditions do you think it would be most...
-
Lovell Company reported the following information related to its long-term assets: Property, plant, and equipment, beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . $230,000...
-
Watersports, Inc., sells high-performance water skis. Because its sales are seasonal, Watersports calculates and uses different reorder points for summer and winter months. The following information...
-
Brockbank Corporation was organized on July 15, 2012. Record the journal entries for Brockbank to account for the following: a. The state authorized 30,000 shares of 7% preferred stock ($20 par) and...
-
For the probability distribution in Exercise 14, find the sampling distribution of the sample mean for all samples of size \(n=2\). (Hint: The sample means will be the same as given in Figure 3.7,...
-
Minitab can also be used to create a graphical summary of a given variable. The graphical summary can be found by selecting the Stat menu; under Basic Statistics a. Using Minitab, create a graphical...
-
Often we may be interested in comparing the amount of variability between two different data sets. This can be done using the sample coefficient of variation \((C O V)\), which is a percentage that...
Study smarter with the SolutionInn App