Old Mule Farms Case Study Essay

613 Words Apr 8th, 2015 3 Pages
-------------------------------------------------
Case Study Memorandum
TO: Dr. Kathleen Sheehan, BECO 4310 - 003
FROM: Brian J. Walsh
DATE: 3/2/2015
RE: Old Mule Farms The Old Mule Farms is a cow-calf operation that provides calves for feedlots to fatten up before being sent to packing houses and eventually sold as meet for consumers. The current owners have been experiencing a problem with losses in revenue. The expenses that Old Mule Farms incurred are veterinary bills, labor, nutritional supplements and minerals, and a variety of forage. The forage is primarily grazed grasses but is supplemented with hay.
The owners of the farm have found a correlation between the weight of a cow, and the cost of feeding it, in
…show more content…
Taking into consideration that the weight of the cows is a key driver of calf weight, which in turn is the key driver of revenue.
An Old Mule Farms average cow weight ranges between 1000 lbs. and 1400 lbs. My recommendation is that if they were to eliminate the lighter and heavier 40% of cows respectively, Old Mill Farms would have heavier calves to sell, resulting in higher revenues. This would also reduce expenses each of the heavier cows has been causing. This recommended approach will substantially reduce the expenses incurred by heavier cows, and increase the calf sell weight produced by the lighter cows. The best approach to measuring the proper size of a cow is to use the primary key driver of cow weight and compare the value of a calf to the cost of maintaining a cow. The principle of diminishing marginal productivity states that as one input in the production process is increased, there will be a point in which the addition of an input will result in smaller and smaller benefit. We can relate this principle with the weight of cows. As more nutrients, minerals, and forage is added to a cow the more a cow weighs. This in turn results in heavier calves. However, when a cow begins to weigh over 1200 lbs. the weight of calves diminishes. When taking in to account the principle of diminishing marginal utility, Old Mill Farms would be able to eliminate their losses by restricting their cow weight to 1200