RECOMMENDATION: My recommendation for Precision Worldwide, Inc. (PWI) is to immediately stop the production of steel rings. PWI then needs to sell the remaining steel rings to at least recoup some of their initial investment. 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.
CONCLUSION: By changing their production offering to the plastic rings, PWI will create more profit which in turn will keep them ahead of competitors in the industry. The remaining 15,100 steel rings will have to be calculated as a sunk cost. With this new product offering, PWI will be able to …show more content…
One of the reasons that Precision Worldwide, Inc. needs to take the risk in producing the plastic rings is because they can afford to halt production of the steel rings. After taking into consideration their opportunity costs it would be the wisest decision