Founded in 1983 and foreclosed in 1996 Beverly Hills Fan Company was located in Woodland Hills, California. With 23 employees and sales of less than $10 million, the company was relatively small. Management felt that there was potential for growth in the upscale market for ceiling fans and lighting. They were particularly optimistic about growth in Mexican and Canadian markets.

Presented below is information from the president's letter in one of the company's last annual reports.

Beverly Hills Fan Company
President's Letter

An aggressive product development program was initiated during the past year resulting in new ceiling fan models planned for introduction this year. Award winning industrial designer Ron Rezek created several new fan models for the Beverly Hills Fan and L.A. Fan lines, including a new Showroom Collection, designed specifically for the architectural and designer markets. Each of these models has received critical acclaim, and order commitments for this year have been outstanding. Additionally, our Custom Color and special order fans continued to enjoy increasing popularity and sales gains as more and more customers desire fans that match their specific interior decors. Currently, Beverly Hills Fan Company offers a product line of over 100 models of contemporary, traditional, and transitional ceiling fans.

Instructions

a. What points did the company management need to consider before deciding to offer the special-order fans to customers?

b. How would have incremental analysis been employed to assist in this decision?