Crystal Lake Fisheries—III

Twelve months into her tilapia production operation, Patricia and her manager were reviewing their costs and revenues in the previous year. Their assumptions about market prices had held, but they were not able to produce as much as they expected. They were concerned about the costs of feed which were beginning to rise although they were able to negotiate bulk discounts. Feed costs accounted for nearly one half of the costs of fish production costs. Feed quality too concerned them. Without a feed processing industry, Ghana depended on imports from South America, the middle east and Asia. The local substitutes such as palm oil residue and cassava peelings did not adequately provide the required balanced diet. Patricia wondered whether integrating backwards to produce the feed for her operations would benefit her. The case has information to help her optimize her operations and inform her of the sensitivity of recommendations to various assumptions.