Question
Beverly Hills Fan Company was founded in 1983 and closed for bankruptcy in 1996. It was located in Woodland Hills, California. It was a relatively
Beverly Hills Fan Company was founded in 1983 and closed for bankruptcy in 1996. It was located in Woodland Hills, California. It was a relatively small company, with 23 employees and less than $10,000,000 in sales. In 1992, management thought they had a great growth opportunity in the luxury lighting and ceiling fan market. They were very optimistic about the growth opportunity, especially in the Mexican and Canadian markets. Below is the letter from the company president in the company's latest annual report: An aggressive product development program has been initiated over the past year, which has resulted in plans to introduce new models of ceiling fans to be introduced to the market this year. Celebrity designer Ron Rezek created several fan models for the Beverly Hills Fan and L.A. Fans. Fan, including a Showroom Collection designed specifically for the architect and designer markets. Both have received critical acclaim and the commitments to order this year are standouts. Additionally, our Custom Color and special order fans are increasing in popularity and sales as our customers demand fans that match their interior decorating tastes. Today, the Beverly Hills Fan Company offers a line of more than 100 models of ceiling fans in contemporary, traditional, and transitional styles."
a) What points should management consider before deciding to offer special-order fans to customers?
b) How would incremental analysis have been used to have helped management in this decision?
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