You are the owner of Peterson Company, which provides a significant product component to the Gund Firm. The manager at Gund has asked you for a dis¬ count on the components you are providing. Since becoming a major supplier for Gund, your firm has spent $26,000,000 in plant layout changes, quality im¬ provements, and equipment purchases to provide the type of product and the delivery schedule requested by Gund. The only way in which you could provide the price break is to lower your quality control standards. The lowered quality control standards would save the company approximately $5,000,000 annually for the next 3 years.

a. Discuss your response to Gund Firm.

b. Is it ethical to make a product at lower than the best possible quality that you have already achieved? Why or why not?

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