American Liquor Sales House (ALSH) faces declining profitability due to unknowingly selling counterfeit wines. The case explores ALSH’s financials, calculating a $20.5 million annual profit before considering fake wine refunds. Counterfeit wines cost ALSH $2.1 million in refunds, reducing net profit to $18.4 million. To address this, ALSH considers partnering with a third-party screening service. The optimal screening cost is determined to be $0.30 per bottle, maintaining current profit levels while improving reputation. The case recommends implementing wine screening, launching an advertising campaign to rebuild trust, and potentially adjusting pricing and refund policies to optimize profitability in the wine market.