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Optical Distortion Inc

Autor:   •  March 8, 2011  •  Case Study  •  365 Words (2 Pages)  •  2,286 Views

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ODI should start entering the market region by region, starting with California which is the largest market (over 46M chickens). Two counties in Southern California contain 20 farms that house 21 million chickens (38% regional share), which suggests that the first focus should be southern California. ODI lenses have already been tested on a number of farms in California with satisfactory results. The sales force should target efficient medium farms and then it should move to the closest and more profitable areas.

Fixed Costs:

Payment for New World $25,000

Office and warehouse (from Table B) $196,000

Headquarters 184,000

Salesmen (7 for 521 farms) 280,000

Technical Representatives (2 for 7 salesmen)70,000

Advertising and promotional 100,000

Trade shows 100,000

Total $955,000

Variable Costs

Manufacturing 3.2c

Injection molds .08c ($12000/15 million)

Box Costs (Page 7, note) .17c

Total 3.45c

1. Reduction in cannibalism. (9% to 4.5%): Rate of mortality with debeaking 9% of $2.4 = $.216. Rate of mortality with ODI lens is 4.5% of $2.4 = $0.018. Difference = 10 cents.

2. Reduction in feed: If we assume reduction in depth is 0.5", 156/2 (Savings for ½ feet per day) * 1/20000(savings per chicken) * 158/2000(savings/lb) * 365 = $6.9.

Annual feed cost per hen with debeaking = $7.04. Savings without debeaking = 11.25 cents.

3. Reduction in egg laying trauma: Total loss if 2.4 eggs per year

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