GMOptim Analysis for Yellow Corn

The table below shows an analysis of the expected results from the available case scenarios:
GMOptim Analysis for Yellow Corn
GM Type AA Type
Number of Bushes expected from GM Corn 482,500 290,000
Total Revenue due to Scenario #1 2,653,750 1,450,000
Cost of production 1,568,125 783,000
Net Revenue 1,085,625 667,000
Total Revenue due to Scenario #2 2,267,750 Cost of production 1,568,125 Net Revenue 699,625 Current Average working figure 931,225 There are always numerous risks that are accompanied by changing a business product. In this case, the modification of the type of corn can affect the total revenue in multiple ways. In replacing the crop type, it must be presumed that the demand will remain the same and therefore the farm can sell all the produced bushels. In fact, the firm must put in more resources to marketing and logistics since it has to sell 192,500 additional bushels. It must be anticipated that the additional costs will not exceed the profit margins that are expected.
In the eventuality of any scenario, the net revenue collected from GM Yellow Corn is higher that the revenue anticipated from AA Yellow Corn. In case Europe adopts few restrictions on importation but prohibits production in Europe, the difference is 418,625 [1,085,625-667000]. In case Europe embraces heavy restrictions on the importation of these products, then the anticipated difference is a mere 32,625 [699625-667000].
Using the average for the probability of the occurrence of the two scenarios, the change seems worthwhile as it yields a positive marginal difference of 264,225 [931,225- 667,000].

However, the investment is also favored by the fact that the eventuality of the European markets will be apparent before the summer planting season. If scenario #1 is adopted, the firm should go ahead and invest in cropping GM Yellow Corn. However, it scenario #2 is taken, the small difference runs the risk of being exceeded by the additional operational costs associated with the change, and therefore the farm should retain AA Yellow Corn.