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Decision Making Model (only A)




Company A produces and sells a popular pet food product packaged under two brand names, with formulas that contain different proportions of the same ingredients. Company A made this decision so that their national branded product would be differentiated from the private label product. Some product is sold under the company?s nationally advertised brand (Brand X), while the re-proportioned formula is packaged under a private label (Brand Y) and is sold to chain stores.;Because of volume discounts and other stipulations in the sales agreements, the contribution to profit is $40 per case for product sold to distributors under the company?s Brand X national brand compared to $30 per case for the Brand Y private label product.;An ample supply is available of most of the pet food ingredients, however, three additives are in limited supply. The tight supply of nutrient C (one of several nutrient additives), a flavor additive, and a color additive all limit production of both Brand X and Brand Y.;The formula for a case of Brand X calls for 4 units of nutrient C, 12 units of flavor additive, and 6 units of color additive. The Brand Y formula per case requires 4 units of nutrient C, 6 units of flavor additive, and 15 units of color additive. The supply of the three ingredients for each production period is limited to 30 units of nutrient C, 72 units of flavor additive, and 90 units of color additive.


Paper#79122 | Written in 18-Jul-2015

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