Question

The juice company is a medium-sized company producing fourdifferent flavors of juice, including two new flavorsrecently added on the ground they were in high demandby customerswho were willingto pay a premium for them.Recently, under the pressure ofshareholdersabout the poor financial performance, GraceOrland, manager of the juice company, has been concerned over the erosion of the recent financial results especially for the standard flavors (A and B) which used to earn a 20 per cent of profit margin. Richard Dunn, the manufacturing manager, was also excited to introduce the new flavors since they were expected to generate higher margins while using the same technology as standard flavors. However, he noticed that the introduction of new flavors added some technical complexities to the production process. For instance, unlike Flavors A

Answer 1

The text presents a problematic situation related to the production, profitability, and demand of a juice factory.

The text describes a problematic situation of a juice company in which it began to produce two more flavors of juice different from the traditional ones (juice A and juice B).

However, this did not produce the expected results because the expected profits were not obtained due to the fact that the production of these new juices was less and required more resources for their manufacture.

In collusion, the addition of two new flavors was somewhat disadvantageous because it did not bring the expected economic results and complicated the production of the juices that the company was already producing.

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The juice company is a medium-sized company producing four different flavors of juice, including two new flavors recently added on the ground they were in high demand by customers who were willing to pay a premium for them.

Recently, under the pressure of shareholders about the poor financial performance, Grace Orland, manager of the juice company, has been concerned over the erosion of the recent financial results especially for the standard flavors (A and B) which used to earn a 20 percent of profit margin.

Richard Dunn, the manufacturing manager, was also excited to introduce the new flavors since they were expected to generate higher margins while using the same technology as standard flavors. However, I have noticed that the introduction of new flavors added some technical complexities to the production process. For instance, unlike Flavors A & B, which were produced in huge volume and in long production runs, difficulties started to arise with the new flavors which were produced in smaller batches but required more changeovers and more production runs (see Exhibit 3).

1. Describe the problem the company is facing.