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PRESENTATION BY

RIDAB
VISHAL
ALEX
INTRODUCTION


Preliminary Analysis
Determine the cost/savings benefit to
the farmer Vs. debeaking
debeaked ODI savings
mortality .216 .108 .108
feed 7.04 6.837 .203
labor .034 .033 .001
egg laying .099 --- .099
.411
cost of lens -.08
total savings per bird .331



Calculation of mortality
debeaked = 9% (pg. 5,first paragraph)
i.e. 9% of $2.40 (exhibit 5)= $0.216

ODI = 4.5% (pg.. 5, 5th paragraph)
i.e. 4.5% of $2.40(exhibit 5) = $0.108



debeaked ODI savings
mortality .216 .108 .108
feed 7.04 6.837 .203
labor .034 .033 .001
egg laying .099 --- .099
.411
cost of lens -.08
total savings per bird .331

Calculation for the feed
debeaked
it is $7.04 (exhibit 5)

ODI calculations
24.46 - 23.68 (on page 6, 2nd paragraph)
.78 / 100 = .0078 per chicken per day
.0078 * 365 = 2.847 lbs. for the whole year
benefit to the farmer $158 per ton, (pg.. 6, 2nd para.)
will be $0.158 per kg.
1 lbs.. = .453 kg.
Benefit will be 1.28969 kg. Per hen
1.28969 * .158 = .203
therefore 7.04 - .203 = $6.837
debeaked ODI savings
mortality .216 .108 .108
feed 7.04 6.837 .203
labor .034 .033 .001
egg laying .099 --- .099
.411
cost of lens -.08
total savings per bird .331


Calculation for labor

debeaked (pg. 5, 2nd para)
3 * $2.5 = $7.50
$7.5 / 220 = $0.34

ODI (pg. 5, last para)
3 * $2.50 = $7.50
$7.50 / 225 = $.033
debeaked ODI savings
mortality .216 .108 .108
feed 7.04 6.837 .203
labor .034 .033 .001
egg laying .099 --- .099
.411
cost of lens -.08
total savings per bird .331

Calculation for egg laying (trauma)

debeaking (pg. 5, 1st para)
loss one egg per 5 month
total loss is 2.4 eggs per year per hen
total cost per dozen = $0.50 ( exhibit 5)
total loss = 50 * 2.4 / 12 = $0.099 per hen

ODI
no loss (pg. 5, last line)

debeaked ODI savings
mortality .216 .108 .108
feed 7.04 6.837 .203
labor .034 .033 .001
egg laying .099 --- .099
.411
cost of lens (pg.7, first line) -.08
total savings per bird .331
Determine the variable costs per pair
of lens
manufacturing (pg. 2, para 5) .032
injection 12000/15 million .0008
(pg.2 para 5)
box cost (pg 7, note) .00168
Plastic box .10
filling cost .14
order processing .18
total .42
divide by no. of lenses ie 250
______
total variable cost .03448
Determine the fixed costs

Fixed costs
a) payment to new world (pg.2, para 5) $25,000
b) office and warehouse (pg.7, table b) 196,000
c) head quarters expense (pg.7, para 2) 184,000
(assuming 20 million pair)
d) salesmen 280,000
e) technical representatives 70,000
f) advertising and promotional (pg. 7, 2nd para) 100,000
g) trade shows (pg. 7, 2nd para) 100,000
total fixed costs $ 955,000

Assuming seven sales men, target California (flock size 20,000
and above) as per exhibit 3.
Flock size No. farms No. chickens
20000-49000 320 9,517,453
50000-99000 114 7,459,994
100000&above 87 22,952,283
521 39,929,730
per salesmen can cover 80 farms each year as assumed in
page 6 last paragraph
so 521/80 = 6.5 so taking 7 salesmen

so 7 * 40000 (pg.6 ,last paragraph) = 280,000


Fixed costs
a) payment to new world (pg.2, para 5) $25,000
b) office and warehouse (pg.7, table b) 196,000
c) head quarters expense (pg.7, para 2) 184,000
(assuming 20 million pair)
d) salesmen 280,000
e) technical representatives 70,000
f) advertising and promotional (pg. 7, 2nd para) 100,000
g) trade shows (pg. 7, 2nd para) 100,000
total fixed costs $ 955,000
Calculation for technical representatives
one technical representative is enough for five
salesmen (pg. 6, last para)
therefore two are required for seven salesmen
2 * 35000 (pg 6, last para) = 70000


Fixed costs
a) payment to new world (pg.2, para 5) $25,000
b) office and warehouse (pg.7, table b) 196,000
c) head quarters expense (pg.7, para 2) 184,000
(assuming 20 million pair)
d) salesmen 280,000
e) technical representatives 70,000
f) advertising and promotional (pg. 7, 2nd para) 100,000
g) trade shows (pg. 7, 2nd para) 100,000
total fixed costs $ 955,000
Determine the appropriate price range
Range of pricing is between $.08 and $.24
if we use
price for pair of lenses $.24 $.08
variable costs .03448 .03448
(as calculated)
fixed costs .04775 .04775
profits for ODI (per pair) $.1577 $(-.00223)

Calculation of fixed costs
$955,000 / 20,000,000 = $0.04775

Range of pricing is between $.08 and $.24
if we use
price for pair of lenses $.24 $.08
variable costs .03448 .03448
(as calculated)
fixed costs .04775 .04775
profits for ODI (per pair) $.1577 $(-.00223)
Strategic analysis


price selection should be





The breakeven at $.24 is going to be 4,646,750
pairs of lenses.
Which seems achievable because we are targeting
40,000,000.(calculated earlier)
Calculation of breakeven quantity
fixed costs = (price per pair - v.c. per pair) * break
even quantity
955,000 = (.24 - .03448) * Q
955,000 = .20552Q
Q = 955,000 / .20552
Q = 4646750

No!
Thank you

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