PANCHES The Colt James brand of meat snacks is produced a ranch/snack company headquartered outside of Absaroka MT. They make packaged meat stacks using Montana-raised cows (angus crowbred with waygu) and all- natural ingredients. They sell the ment snacks to specinlty food stores across the US and convenience stores in Montana They are at the point where formal operations analysis will benefit their planning process. They are using x ment packaging company in South Dakota, and the owner is interested in improving margins by using a different production technique Currently, the meat snacks sell at wholesale for $7 per package Last year, Colt James sold 3.000 packages Production methods/techniques: $ 21'Coo At the current time, the owner has identified three different possible production methods: 1) ship the cows to a meat packaging company in South Dakota, giving them specifications on ingredients and packaging: 2) butcher the cows at the ranch, pre-mix the meat snack at the ranch, and send to a packager in Ronan for final packaging: 3) build a full production facility at the ranch and bring production entirely under the control of the owner. For options 1 and 2, the finished meat snacks are shipped back to the Colt James ranch and stored until ready for distribution The owner has done some work evaluating the costs of each production technique; those results are presented in a table at the end of this document. Note that option 3 variable costs are valid for all ranges of output but that option 3 fixed costs are for a production facility designed to have a maximum capacity of 200,000 units per year. Unit volumes and unit price forecast assumptions Last year, the company sold 3.000 units (packages). The expected CAGR (compound annual growth rate) for the beef snack market is 0% (for the next five years). The owner, who very much believes in his product, expects that his growth rates for the next five years (listed in order) will be: 100%, 75%, 75%, 50%, 30%. The wholesale price per unit ($7) is not expected to change assignments, you may incorporate handwritten calculations in your pdf if you are having difficulty formatting the information through software means. Tier 1 requirements (maximum grade of B+): 1. Identify (ie, form the mathematical function TC F + Vr) the production cost functions for the production alternatives and find the breakeven point for each production technique (technology). 2. Prepare a graph that visualizes how total production cost (TC) for the three different alternatives changes as unit volumes increase from 0 to 50,000. 3. Develop a five year (future) unit sales forecast using your own judgment of the appropriate methodology and growth estimates. 4. Identify the optimal production technique for each year of the next five years. 5. Prepare a statement of sales, cost of sales, and gross profit (in the appropriate format) for the next five years, using your five year unit sales forecast and the optimal production technique for each year. Figure 1: Production Technique Costs CJ mixes, o/S pkging 3 1.5 0 C does full mfg 3 1.5 Beef per lb costs are all net yield unless otherwise indicated 2 lb of butchered beef yields 3 packages SDO/S Beef cost, per lb 7.5 Spice & other ingredients, per mix lb 2.5 O/Smixing cost, per mix lb 1 o/s packaging cost, per pkg 1 Cattle shipping cost, per 100 lbs 3.25 Outbound shipping cost, per lb 0 Inbound shipping cost, per lb 3.5 0 1 ON 0 0 0 3.5 0 Variable materials costs: Packaging materials, per pkg 0 0 0.1 0 0 Variable labor costs: Butchering, per lb Mixing, per lb Bulk packaging for shipping, per lb Final packaging, per pkg 2.1 0.25 0.5 0 2.1 0.25 0 0.2 0.14 2.5 0 0 2.86 2.55 0 Fixed costs (per year): Shop foreman salary & benefits Rent/land usage (build on unused land on ranch) Utilities (primarily electric) Maintenance 10000 0 3000 500 45000 0 6000 1000 2500 250 2760 13500 52000 1000 640 0 Capital costs (per year): Production facility brick & mortar Freezer Storage shelving Mixing machine Packaging machine Oven/smoker Misc production equipment 2400 640 200 500 0 0 5000 1920 1000 500 1000 650 1000 0 0 200 0 e careful in the units of measure you choose when analyzing the process alternatives. Note tha Molrocure to state all costs in the sa PANCHES The Colt James brand of meat snacks is produced a ranch/snack company headquartered outside of Absaroka MT. They make packaged meat stacks using Montana-raised cows (angus crowbred with waygu) and all- natural ingredients. They sell the ment snacks to specinlty food stores across the US and convenience stores in Montana They are at the point where formal operations analysis will benefit their planning process. They are using x ment packaging company in South Dakota, and the owner is interested in improving margins by using a different production technique Currently, the meat snacks sell at wholesale for $7 per package Last year, Colt James sold 3.000 packages Production methods/techniques: $ 21'Coo At the current time, the owner has identified three different possible production methods: 1) ship the cows to a meat packaging company in South Dakota, giving them specifications on ingredients and packaging: 2) butcher the cows at the ranch, pre-mix the meat snack at the ranch, and send to a packager in Ronan for final packaging: 3) build a full production facility at the ranch and bring production entirely under the control of the owner. For options 1 and 2, the finished meat snacks are shipped back to the Colt James ranch and stored until ready for distribution The owner has done some work evaluating the costs of each production technique; those results are presented in a table at the end of this document. Note that option 3 variable costs are valid for all ranges of output but that option 3 fixed costs are for a production facility designed to have a maximum capacity of 200,000 units per year. Unit volumes and unit price forecast assumptions Last year, the company sold 3.000 units (packages). The expected CAGR (compound annual growth rate) for the beef snack market is 0% (for the next five years). The owner, who very much believes in his product, expects that his growth rates for the next five years (listed in order) will be: 100%, 75%, 75%, 50%, 30%. The wholesale price per unit ($7) is not expected to change assignments, you may incorporate handwritten calculations in your pdf if you are having difficulty formatting the information through software means. Tier 1 requirements (maximum grade of B+): 1. Identify (ie, form the mathematical function TC F + Vr) the production cost functions for the production alternatives and find the breakeven point for each production technique (technology). 2. Prepare a graph that visualizes how total production cost (TC) for the three different alternatives changes as unit volumes increase from 0 to 50,000. 3. Develop a five year (future) unit sales forecast using your own judgment of the appropriate methodology and growth estimates. 4. Identify the optimal production technique for each year of the next five years. 5. Prepare a statement of sales, cost of sales, and gross profit (in the appropriate format) for the next five years, using your five year unit sales forecast and the optimal production technique for each year. Figure 1: Production Technique Costs CJ mixes, o/S pkging 3 1.5 0 C does full mfg 3 1.5 Beef per lb costs are all net yield unless otherwise indicated 2 lb of butchered beef yields 3 packages SDO/S Beef cost, per lb 7.5 Spice & other ingredients, per mix lb 2.5 O/Smixing cost, per mix lb 1 o/s packaging cost, per pkg 1 Cattle shipping cost, per 100 lbs 3.25 Outbound shipping cost, per lb 0 Inbound shipping cost, per lb 3.5 0 1 ON 0 0 0 3.5 0 Variable materials costs: Packaging materials, per pkg 0 0 0.1 0 0 Variable labor costs: Butchering, per lb Mixing, per lb Bulk packaging for shipping, per lb Final packaging, per pkg 2.1 0.25 0.5 0 2.1 0.25 0 0.2 0.14 2.5 0 0 2.86 2.55 0 Fixed costs (per year): Shop foreman salary & benefits Rent/land usage (build on unused land on ranch) Utilities (primarily electric) Maintenance 10000 0 3000 500 45000 0 6000 1000 2500 250 2760 13500 52000 1000 640 0 Capital costs (per year): Production facility brick & mortar Freezer Storage shelving Mixing machine Packaging machine Oven/smoker Misc production equipment 2400 640 200 500 0 0 5000 1920 1000 500 1000 650 1000 0 0 200 0 e careful in the units of measure you choose when analyzing the process alternatives. Note tha Molrocure to state all costs in the sa