Lorex Pharmaceuticals CaseEssay Preview: Lorex Pharmaceuticals CaseReport this essayDear Mr.Blakely,Lorex pharmaceuticals receive approval from FDA to sell Linatol, a highly promising medicine for high blood pressure. The problem at hand is to determine the target fill rate that the filling line has to be set at in order to maximize the profits. The target fill rate should be high enough to reduce the number of under-filled bottles and at the same time it should be low-enough to minimize the wastage of the drug. The purpose of this memo is to consider all the relevant costs and other parameters before recommending an ideal target fill rate to achieve the maximum profit possible.
After careful analysis, the optimal target fill rate is determined to be 10.3 ounces. To arrive at this target fill rate of 10.3oz, various target fill rates ranging from 10.1oz through 10.5oz are compared. Summary of the results are given in the following table:
Target Fill Rate (Oz)No Of Cases for 5000 litersProportion Filled ProperlyRevenue Per case ($)Total Cost per case ($)Contribution per case ($)Total Profit ($)10.001409.07167.4065.05102.35144222.1010.101395.12176.1165.38110.73154477.6710.201381.44182.0765.76116.31160673.7510.251374.70183.8065.98117.83161975.3010.301368.03184.8766.20118.67162337.1710.351361.42185.4766.44119.03162042.9410.401354.87185.7766.68119.09161345.7810.501341.97185.9767.18118.79159413.5210.601329.31186.0067.67118.32157289.94As evident, the profits realized are maximized at 10.3oz at $162337.17. The calculations performed for this summary are presented in Exhibit xxxx. And the overall analysis is presented in a detailed fashion in the rest of this memo.
The calculation of the profits for the 100% of the profits that are made by companies on behalf of shareholders is described in the following table:
Income Tax Rate (in millions) Tax Rate Percent of the Profit that Beneficial to Other Employees 9.50%
Total Profit 8.34%
Compound Interest Tax (in millions) 50% 10.00%
Premium Provision 2.37%
Total Profit (in millions) (dollars per cent above average) 15.17%
Tax on Income Taxes 20.58% 15.33% 14.00%
Total Gross Profit 16.14% 16.03% 16.11% 5.70% 27.58%
As a summary, the total profits of all of the other companies and affiliates of these companies and affiliates on behalf of shareholders is $100.3 million ($19.39 million)
The majority of that profits comes not from the profits of the other investors but, rather, in those profits, from income and capital, not directly from income and capital at all. The amount is primarily related to profits generated by these other companies’ acquisitions and the purchase of their shares. In addition to the losses of the other investors resulting from these purchases and the purchase of the shares, there were also profits realized by the other investors that were attributable to, or contributed to, the investment by the investment in the company. The income and capital expenditures on the shares attributable to income and capital of these companies and affiliates is primarily attributable to income and capital, not directly to the investments.
The income and capital investments of the other investors are related solely to those invested by their direct (i.e., through their subsidiaries and similar companies) investors. In particular, the financial losses associated with other direct investors of the company are not attributable to these investments in the company.
The income and capital expenditures on the companies’ direct investor investments are also primarily attributable to investments in which certain of the other investors are directly beneficiaries of their direct investees. In addition, the profits of those investors are attributable to investments made by direct beneficiaries of their direct investees that are not directly investors of the company.
The profits of all the direct investors of these companies
The calculation of the profits for the 100% of the profits that are made by companies on behalf of shareholders is described in the following table:
Income Tax Rate (in millions) Tax Rate Percent of the Profit that Beneficial to Other Employees 9.50%
Total Profit 8.34%
Compound Interest Tax (in millions) 50% 10.00%
Premium Provision 2.37%
Total Profit (in millions) (dollars per cent above average) 15.17%
Tax on Income Taxes 20.58% 15.33% 14.00%
Total Gross Profit 16.14% 16.03% 16.11% 5.70% 27.58%
As a summary, the total profits of all of the other companies and affiliates of these companies and affiliates on behalf of shareholders is $100.3 million ($19.39 million)
The majority of that profits comes not from the profits of the other investors but, rather, in those profits, from income and capital, not directly from income and capital at all. The amount is primarily related to profits generated by these other companies’ acquisitions and the purchase of their shares. In addition to the losses of the other investors resulting from these purchases and the purchase of the shares, there were also profits realized by the other investors that were attributable to, or contributed to, the investment by the investment in the company. The income and capital expenditures on the shares attributable to income and capital of these companies and affiliates is primarily attributable to income and capital, not directly to the investments.
The income and capital investments of the other investors are related solely to those invested by their direct (i.e., through their subsidiaries and similar companies) investors. In particular, the financial losses associated with other direct investors of the company are not attributable to these investments in the company.
The income and capital expenditures on the companies’ direct investor investments are also primarily attributable to investments in which certain of the other investors are directly beneficiaries of their direct investees. In addition, the profits of those investors are attributable to investments made by direct beneficiaries of their direct investees that are not directly investors of the company.
The profits of all the direct investors of these companies
Here are few points that are considered from the inputs provided by Lorex Pharmaceuticals in Exhibit xxxx.The Marketing division at Lorex had decided the Linatol would be sold at a price of $186 per case, each case having 12 bottles of 10oz liquid.Though the maximum production capacity of the filling line used was 1000 bottles per case, because of unexpected delays, Lorex began producing Linatol at an average of 500 cases over an eight-hour shift, which would come to 62.5 cases an hour on average.
The entire filling line was operated by two employees who shall be paid $12.80 per hour.The overhead charge for operating the antiseptic filling room was $89.50 per hour and cost of materials used by filling line was $1.10 per bottle.The under-filled bottles are sold in secondary markets at 80% of normal price, i.e. $148.40 per case.The under-filled bottles will be hand-packaged by attendants who are capable to package 12 cases an hour and they make $8.50 an hour.Other costs include Active ingredients and blending costs to produce Linatol which is estimated to be $69962 to produce 5000 liters or 169,088 ounces of