Louisville Slugger Essay

859 Words Oct 27th, 2012 4 Pages
Louisville Slugger The Louisville Slugger baseball bat began over 120 years ago in the talented hands of 17-year-old John A. “Bud” Hillerich. Bud, whose father owned a woodworking shop, left work one afternoon to watch Louisville’s major league team, the Louisville Eclipse, and his favorite player, Pete Browning. During the game, Browning, who was struggling through a long hitting slump, broke his bat. Following the game, Bud met Browning and invited him to his father’s shop to make him a new bat. With Browning’s assistance, Bud handcrafted a new bat for Browning from a single piece of wood. Browning got three hits with it the next day and the “Louisville Slugger” was born. Since that time, baseball legends like Babe Ruth and …show more content…
Louisville Slugger spent $6,000,000 to develop a new model, which has many of the features of the Warrior, except for twice the strength. This is due to the use of ST+20 alloy, carbon composite inserts, and an internal carbon composite sleeve. The company named this prototype the TPX Exogrid. Further, the company spent $350,000 for a financial consultant to determine whether the new bat was feasible and whether it would be profitable. If the TPX Exogrid model is introduced, production of the existing TPX Warrior will be terminated in three years. The company will continue to manufacture the Warrior for three more years because the company still expects to profit from sales of the Warrior and the company estimates that the Warrior’s technology will not be outdated until that time. If Louisville Slugger introduces the Exogrid, sales of the Warrior will fall by 17,000 bats per year. Further, the current cost of the Warrior at $200 will have to be lowered to a discounted rate of $125 per bat. Variable costs of the Warrior are $70 each and the fixed costs for the Warrior are $2,150,000 per year. If Louisville Slugger does not introduce the Exogrid, the Warrior’s estimated sales will be 75,000, 65,000, and 45,000 bats for the next three years, respectively. Net working capital for the Exogrid will be 20 percent of sales and will occur in each individual cash flow year. For example, there will be no initial outlay for net working

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