TenAlpina Tools: Product Expansion
Giulia Ferrato, a recent MBA graduate, has developed a high quality piton, a tool used in mountain climbing. Owing to the security of a customer's offer to guarantee a significant level of demand for a two-year period, she agreed to take over the forge needed for production. She is now trying to decide whether or not to introduce a new product line, a wall hammer. Some of the current capacity can be used to make this product, but its manufacture would incur some new costs. A move away from offering only a single product line also raises the issue of cost allocations.