Precision Worldwide, Inc.
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 sub- stantial inventory of special steel that had been putchased 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
Precision Worldwide, Inc. 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 sub- stantial inventory of special steel that had been putchased 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
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