This document presents an analysis of the costs and savings of debeaking versus using Optical Debeaking Instruments (ODI) for chickens. Some key points: - Debeaking results in savings of $0.331 per bird compared to ODI due to lower mortality, feed costs, labor costs, and egg laying costs. - The total variable cost per pair of ODI lenses is $0.03448, including manufacturing, injection, and box costs. - Total fixed costs for ODI are estimated at $955,000 annually, including payments, facilities, staffing, marketing, and trade shows. - For ODI to be profitable, the lens price would need to be

1. PRESENTATION BY
RIDAB
VISHAL
ALEX

2. INTRODUCTION

3. Preliminary Analysis

4. Determine the cost/savings benefit to
the farmer Vs. debeaking

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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)

13. 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

14. Determine the variable costs per pair
of lens

15. 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

16. Determine the fixed costs

17. 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

18. 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

19. 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

20. 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

21. 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

22. Determine the appropriate price range

23. 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)

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

25. 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)

26. Strategic analysis

27. price selection should be

28. 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)

29. 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

30. No!

32. Thank you