Precision Worldwide

PRECISION WORLDWIDE, INC.

Professor William J. Bruns, Jr.

“Industrial Grinders N.V”

Case Study

Jaime Soto, Brandi Thomas, Michael Willete, Laurie Vick, Kevin Williams

PRECISION WORLDWIDE, INC

Introduction

Precision Worldwide, Inc. (PWI) is facing a tough decision that many companies during this age face, change.

Background

PWI

Key Problems

1. Inventory, (sunk costs?)

2. Demand projections.

Alternatives

1. Steel rings

2. Plastic rings

Proposed Solution

Dispose of steel rings and move to plastic rings, eventually. Reason, simple, life span and cost of the plastic rings favor this decision.

Recommendations

Plastic and steel ring production should be based on market demand. For example, doubts and questions will be on the high, if either plastic or steel rings are dropped “cold turkey,” it could be harmful to the company in the long run.

It is very attractive when you look at the numbers (plastic rings vs steel rings), it’s a no brainer, Thorborg has to plan for the long run in this situation and not fall victim of the short run gains.

Lastly, PWI should produce the plastic rings only in the markets where competitors are offering the plastic rings, this will help PWI stay current with the times and up to speed with customer demands.

References

Bruns, W. (2004). Case Study. Precision Worldwide, Inc., Pages 1-3.

Jiambalvo, J. (2013). Managerial Accounting. Hoboken, NJ: John Wiley & Sons, Inc.

Tables

Table A

100 Plastic Rings 100 Steel Rings

Material $ 17.65 $321.90

Direct labor 65.50 196.50

Overhead

Departmental 131.00 393.00

Administrative 65.50 196.50

Total (cost) $279.65 $1,107.90

Note: Table A above demonstrates

Figures

Figure 1

I believe displaying a graph here comparing both steel and plastic rings will be very beneficial to supporting our case.

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