Optical Distortion Inc Case Study
Case Analysis----Optical Distortions, Inc.
MKT6301 MARKETING MANAGEMENT
2012 FALL
Group Members:
Mina Ai
Wenxin Gao
Shuyue Jia
Yang Pan
Yiou Zhou
Expected Value to Famers
Reduced cost due to feed (For 1/2 feet)
Cost per pound: 158/2000=0.079 $/pound
Saving per year per bird: 156/20000*1/2*0.079*365=$0.1125
Saving on egg production
Loss one egg 5 months: loss of egg per hen a year is 2.4
Cost per dozen: $0.50
Saving per hen per year: 0.50*2.4/12=$0.099
Reduced cost due to mortality
Cost of mortality with debeaking 2.4*9%=$0.216
Cost of mortality with ODI lenses 2.3%*4.5%=$0.108
Saving per hen: $0.108
Total saving by using ODI lenses compared to debeaking: 0.1125+0.099+0.108=$0.319
Because farmers won’t accept this price of $0.319, and the expected value to farmers is: 0.319-0.08=$0.239
Value Sensitivity to Assumptions
Assumptions-------go wrong
As we see in this case, the value of the lenses is 20$ per 3 boxes of 250 pair or 0.08$ per pair, it includes cost as follows: Payment for NW | inventory | Headquarters | Sales | Technic | Ad | Trade shows | product | molds | Box (Page 7) | 25,000 | 196,000 | 184,000 | 280,000 | 70,000 | 100,000 | 100,000 | 3.2 | .08 | 17 |
Let’s see how sensitive this value is to assumptions made.
Assumption: the value of the lenses, which is 20$ per 3 boxes of 250 pair or 0.08$ per pair.
If factor inventory increases, according to Little’s law: Inventory=Flow rate * Flow time, it means the though rate declines, inventory turnover declines, so the fixed cost will increase.
If the number of sales increases, which means the inventory turnover, is fast and cycle time is short, in the end, the company will make profit. If the cost of Ad increases, it means fixed cost goes up. In the market, if Ad has a positive effect on the selling, with the net margin increasing, the cost of the lenses will decline relatively. To these assumptions, there are many reasons towards these assumptions go
MKT6301 MARKETING MANAGEMENT
2012 FALL
Group Members:
Mina Ai
Wenxin Gao
Shuyue Jia
Yang Pan
Yiou Zhou
Expected Value to Famers
Reduced cost due to feed (For 1/2 feet)
Cost per pound: 158/2000=0.079 $/pound
Saving per year per bird: 156/20000*1/2*0.079*365=$0.1125
Saving on egg production
Loss one egg 5 months: loss of egg per hen a year is 2.4
Cost per dozen: $0.50
Saving per hen per year: 0.50*2.4/12=$0.099
Reduced cost due to mortality
Cost of mortality with debeaking 2.4*9%=$0.216
Cost of mortality with ODI lenses 2.3%*4.5%=$0.108
Saving per hen: $0.108
Total saving by using ODI lenses compared to debeaking: 0.1125+0.099+0.108=$0.319
Because farmers won’t accept this price of $0.319, and the expected value to farmers is: 0.319-0.08=$0.239
Value Sensitivity to Assumptions
Assumptions-------go wrong
As we see in this case, the value of the lenses is 20$ per 3 boxes of 250 pair or 0.08$ per pair, it includes cost as follows: Payment for NW | inventory | Headquarters | Sales | Technic | Ad | Trade shows | product | molds | Box (Page 7) | 25,000 | 196,000 | 184,000 | 280,000 | 70,000 | 100,000 | 100,000 | 3.2 | .08 | 17 |
Let’s see how sensitive this value is to assumptions made.
Assumption: the value of the lenses, which is 20$ per 3 boxes of 250 pair or 0.08$ per pair.
If factor inventory increases, according to Little’s law: Inventory=Flow rate * Flow time, it means the though rate declines, inventory turnover declines, so the fixed cost will increase.
If the number of sales increases, which means the inventory turnover, is fast and cycle time is short, in the end, the company will make profit. If the cost of Ad increases, it means fixed cost goes up. In the market, if Ad has a positive effect on the selling, with the net margin increasing, the cost of the lenses will decline relatively. To these assumptions, there are many reasons towards these assumptions go