ODI Case Study

19 Pages 4707 Words

l mainly depend on how well the farmers respond to this new and unusual idea of putting contact lenses in their chickens. Farmers had been using the de-beaking method for the past 50 years. Because farmers are known to be “stuck in their ways” ODI needs to have salesmen personally present the farmers with an annual cost (benefit) savings to the farmer for the lenses vs. the de-beaking method. The cost (benefits) are as follows:
1) Cannibalization decreased from 9% to 4.5%
Per exhibit 4, the cost to purchase a chicken is $2.40 and the allocation cost for replacing the dead birds is $.21. The cannibalism percentage for de-beaking is 9% vs. the cannibalism when using ODI lenses which is 4.5%. Therefore, the savings per chicken due to the reduced cannibalism is 11.74 cents ($2.61 purchase/replacement cost (.09-.045).

2) Less food to purchase
The reduction in the depth of the feed is .5” (actual is between 3/8 to 1”)
The reduction by 1” saved 156 lbs of feed per day for 20,000 birds. Therefore,
.5” reduction in feed woul...