Consider, again, the plight of the manager at Unlimited Decadence Corporation, whose boss wants to manufacture and sell the new Empty Decadence chocolate bar, perhaps using it to replace the Decadent Thunderbolt chocolate bar. Suppose the accounting department has projected that profit per chocolate bar will be \(\$ 0.10\) higher for the Decadent Thunderbolt than for the Empty Decadence chocolate bar. The marketing department predicts that Unlimited Decadence can sell 100000 Empty Decadence chocolate bars the first year and then more each year for the next ten years if it drops the Decadent Thunderbolt chocolate bar. During that same time period, the marketing department forecasts that sales of the Decadent Thunderbolt will be 80000 chocolate bars the first year, with sales decreasing slightly after that if the company does not produce the Empty Decadence chocolate bar. However, if the company produces both chocolate bars, predicted sales for Empty Decadence will be reduced to 70000 chocolate bars the first year, with a slow and steady increase in sales over the next ten years. Predicted sales for the Decadent Thunderbolt will decrease to 65000 during the first year and decrease slightly each year for the next ten years.
The production department has determined that the new chocolate bar is possible to manufacture and that the factory can be reconfigured to accommodate the new chocolate bar while continuing to produce the old chocolate bar. If Unlimited Decadence drops the Decadent Thunderbolt chocolate bar, it can convert the equipment so that it can be used to produce the Empty Decadence chocolate bar. The human resources department is confident that numerous qualified people are available to work if the company wants to produce both chocolate bars. If the company drops the Decadent Thunderbolt chocolate bar, those people currently working on the Decadent Thunderbolt chocolate bar can be easily retrained to work on the Empty Decadence chocolate bar. The chief financial officer has arranged for financing, if it is needed.
Required:
a Based on the above information, what are the advantages and disadvantages of: (i) dropping the Decadent Thunderbolt product line and producing the Empty Decadence chocolate bar, (ii) continuing production of the Decadent Thunderbolt and not producing the Empty Decadence chocolate bar, (iii) producing both the Decadent Thunderbolt and the Empty Decadence chocolate bars, or (iv) producing neither chocolate bar? How would you decide which alternative is best?
b What additional information would make your decision easier?
c What other alternative solutions can you think of?