Optical Distortions

Optical Distortions, Inc. Case

The optical distortion lenses from Optical Distortions Inc. (ODI), was fundamentally created to make chickens partially blind. The lenses are an alternative to debeaking, which was basically the only other method that existed to harness the aggressiveness of chickens. The product’s value measures beyond its ability to grasp control over the chickens. More so, it can provide farmers with direct economic success and eventually, alter farming practices through “[revolutionizing] the business of animal behavior”.

The analysis of the costs that ODI incurs, gives a better indication of the price farmers are to pay. The cost of the lenses developed by New world is fixed at $0.032 per pair to ODI. Also, ODI supplies injection molds to New World for $12,000 each. Each of these injections have a life expectancy of 15 million pairs. Thus, the price for each pair will be $0.0008 (12000/15M). The estimated cost for manufacturing the boxes is $0.10, filling the boxes with lenses is $0.14, and shipping is $0.18, which estimates a total of $0.42. The box consists of 250 lenses so price per lens would be $0.00168 ($0.42/250). Therefore, the total expected value per lens to farmers would be: 0.032 + 0.0008 + 0.00168 = $0.03348.

The ODI lenses delivers many potentially beneficial incentives that could promote a more productive and profitable value to the chicken farmers, with its value components including: (1) reduced chicken mortality, (2) increased feed savings, (3) shortened trauma, (4) heightened interest savings, and (5) decreased labor costs.

Assessing the incremental benefits for each of the components gives a better indication of the real intrinsic value to farmers, if they were to adopt the lenses. (1) The reduction in chicken mortality can also be seen as a reduction in cannibalism, increase in production, and increase in profitability. The value of reduced chicken mortality can be determined by multiplying the total laying cost of $2.61 /dozen eggs by the difference between the initial cannibalism rate of 9% from debeaking to a minimized rate of 4.5% from the application of the lenses. A savings of 11.75 cents/lens. (2) The use of the lenses, allows the chickens to maintain their beak length, which in turn allows farmers to reduce of the depth of the trough. Assuming that the farmers reduce the trough to 1”, the total feed savings will come out to 22.49 cents/lens; calculated by first, converting the cost of feed from $158 /ton to 7.9 cents/lb, then multiplying it by the number of pounds that will fit in a 1” trough which is 156, and then finally dividing that value by 20,000 times 365, which is the annual feed for a flock of 20,000 chickens. Similarly, an optimistic farmer, assuming that they could reduce the trough even further down to ⅜”, would get a low estimate of 8.44 cents/lens; simply by taking the same calculations as before and instead using 58.5 pounds as the feed capacity. (3) Removal of the debeaking procedure, will stimulate the production of more eggs on an annual basis, saving the farmers 4.42 cents/lens; a price/dozen of 53 divided by 12. (4) The interest savings can be estimated by taking the value of reduced chicken mortality, 11.75, and multiplying it by the 8% interest rate, for a value of 0.94 cents/lens. (5) The labor cost savings from switching from debeaking to lenses will save the farmer approximately 0.08 cents/lens; assuming that the number of team members remains the same at 3, wage remains at $2.50/hr, and given the difference in the debeaking procedure to be 220 chickens/hr whereas fitting the contact lenses only takes 225/hr. Thereby, estimating the total value component to range between $0.26 and $0.40 for each pair of ODI lenses.  

However, ODI lenses do harbor some potential risk factors associated with its value components. Since the coloring from the lenses curbs appetite, it may prevent chickens from getting enough nutrients, thereby lessening the quality of the eggs. The reduction in trough size could result in more frequent refilling, which would require someone to maintain. If the lenses are used in the small farms, where birds are in open area and not cages built for them, they could accidentally get hurt due to eye sight distortion. There is a chance of eye infection or possibly permanent vision impairment, if the lenses are not replaced regularly or not removed entirely; due to its sensitivity. ODI may be subject to risk of acceptance as it is a new technology that uses new equipment. It’s success is dependent on the trade shows and advertising campaigns to create awareness and positive vibes. To prosperously launch the product, the company has to pay a high amount of upfront costs to advertise, set up regional offices, and employ both skilled and unskilled labor for these offices.

...