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Now assume the market condition is getting worse in 2 0 2 3 . Still, he assessed that there is a 6 5 % chance

Now assume the market condition is getting worse in 2023. Still, he assessed that there is a 65% chance that he can secure contract for specialty egg but if he cant, he is forced to sell at open market (and accept the loss). Cox has to make a decision whether to revert his farm to a regular (non-specialty) egg production. If he chooses to do so, his cost structure significantly reduce (table below) but he incurs a one-time cost of $250,000. For regular eggs, the current contract price is $0.9 and seems stable at least for the next year. What would you recommend? Do a sensitivity analysis to show your recommendation is robust.
Approximate costs structure for OCF (if hens are spent on week 78) $ / Per Bird
Acquisition from Hatchery $0.95
Total pre-production cost weeks 1-23 $4.25
Fixed overhead cost (facilities, debt service, etc.) $3.24
Variable production costs (feed, transportation, labor, etc.) $18.7
Depopulation $0.15

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