OPTICAL DISTORTION, INC.

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optical distortion, Inc.
PRESENTATION BY RIDAB VISHAL ALEX
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INTRODUCTION

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Preliminary Analysis
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Determine the cost/savings benefit to the farmer
Vs. debeaking
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• 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

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• 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

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• 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

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• 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

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• 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

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• 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

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• 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

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• 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)

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• 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

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Determine the variable costs per pair of lens
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• 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

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Determine the fixed costs
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• 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

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• 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
• 100000above 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

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• 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

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• 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

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• 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

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Determine the appropriate price range

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• 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)

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• Calculation of fixed costs
• 955,000 / 20,000,000 0.04775

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• 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)

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Strategic analysis
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• price selection should be

0.24
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• 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)

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• 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

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No!
is this data realistic?
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will the product succeed?
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Thank you