Decision Diagnostics Corp (DECN)

[EDMGUY]

loan,
Thx for the great reply.

re: the way the cost of the problem tool is accounted for I would say most often the choice is made to modify the existing tool instead of scrapping it entirely. Generally the actual parts of the tool actually producing the product are individual components of a much larger assy. So the fix is generally to either modify the existing components or make new. That decision isn't always an easy one since by this point the tool mfgr has to interrupt it's normal production (which customer do you give the worst news to?) to get the tool back up and the customer is now left with no other option but failing to get product when they expected to start selling it. If your component is part of a larger assy also in production the cost of not having one component on time can be huge, impacting an entire assy line. The question of fault doesn't really need to be addressed here in detail because sometimes it's arguable (even with the customer) who's fault it really was and who pays for the fix. If it's a large customer (who is always right ;) right) then someone probably eats some crow and tries to make the best of it.

Your assumption about who owns the tool (them) is correct, even though it may remain in our possession producing parts for years sometimes decades. Sometimes the tool can even be retrofitted with new/different inserts to produce completely different parts 2012 parts vs. 2016 parts.

As far as my real life hypothetical info, I can assure you I have no first hand knowledge of DECN's current or past business at all. It was only based on experience with the mfg. industry to see how sometimes the same scenario tends to repeat itself a lot. Rosy forecasts just don't always happen like everyone would like them to.

One last question regarding inventory. My first example re: a medical test strip was real so it seems it would apply here. The rolls of material needed to produce the strips were expensive. Each layer provides some essential function such as a capillary fluid channel or electrical test point sending out results. If the matl. was purchased with the expectation of receiving xx qty of parts and sent to the manufacturer for production would it be considered inventory or just cost of sales?. What if was held up from being used for an extended period?