This is a small business started by Alex Lopez in 1980. He was 22 years old, and had just graduat...
This is a small business started by Alex Lopez in 1980. He was 22 years old, and had just graduated from UTSA with a degree in Business. As a young entrepreneur, he bought a greenhouse, and started a hydroponic farm growing tomatoes. Growing various vegetables in water was a new industry at that time. Alex's business is operating in a perfectly competitive industry, competing with other greenhouse and field producers in the U.S. and Mexico. After starting the business, Alex met and married Maria, and in subsequent years, they then had two sons and two daughters. All four children helped their parents while growing up but are now married with careers of their own. The business has grown as well, and Alex and Maria now have eight greenhouses operating throughout three seasons of the year. (The Long Run). Each season is roughly four months. (The short run). Although only Alex and Maria now operate the greenhouses throughout the three seasons, their sons and daughters still help during harvest time. But only Alex and Maria are now on the payroll, taking their income from the profits each season. The whole family gets together on the first Saturday of each season to do the planning. At the planning session everybody sits around the kitchen table at the farm, and uses a model developed by Alex while in college. Some of the data used in the model are taken from the financial statements prepared by the CPA, for the business. Other data have to be planned from experience that has changed over the years. As a consultant, you have gathered this background information, and have been hired to help the family develop the updated data for the upcoming season