Danna Lumus, the marketing manager for a division that produces a variety of paper products, is considering the divisional managers request for a sales forecast for a new line of paper napkins. The divisional manager has been gathering data so that he can choose between two different production processes.

The first process would have a variable cost of $10 per case produced and a total fixed cost of $100,000.

The second process would have a variable cost of $6 per case and a total fixed cost of $200,000.

The selling price would be $30 per case. Danna had just completed a marketing analysis that projects annual sales of 30,000 cases.

Danna is reluctant to report the 30,000 forecasts to the divisional manager. She knows that the first process would be labor-intensive, whereas the second would be largely automated with little labor and no requirement for an additional production supervisor. If the first process is chosen, Jerry Johnson, a good friend, will be appointed as the line supervisor. If the second process is chosen, Jerry and an entire line of laborers will be laid off.

After some consideration, Danna revises the projected sales downward to 22,000 cases. She believes that the revision downward is justified since it will lead the divisional manager to choose the manual system. It shows a sensitivity to the needs of current employees - a sensitivity that she is afraid her divisional manager does not possess. He is too focused on quantitative factors in his decision-making and usually ignores the qualitative aspects.

The break-even point for the first process is 5,000 cases and for the second process 8,333 cases. The sales volume for which the two processes are equally profitable is 25,000 cases.

Suppose that Danna asks for your advice:

Discuss whether or not you agree with Dannas decision to alter the sales forecast.

Explain whether or not Danna is acting ethically. Discuss whether her decision is justified since it helps a number of employees retain their employment.

Explain whether the impact on employees should be factored into decisions like this? In fact, is it unethical not to consider the impact of decisions on employees?

Suppose that Danna invites you in as a consultant. She describes the problem to you. Can you identify a better solution?

From a Christian perspective, would the action was taken by Danna ever be considered acceptable? Explain your answer.