Required:

What factors will influence the level of inventory held in an organisation such as Superfry Limited? Evaluate the importance of using inventory budgets to manage inventory levels at Superfry Limited.

 Superfry Limited is concerned about product quality and customer satisfaction as well as making a profit. Consider whether Superfry Limited would find the use of a balanced scorecard helpful in performance measurement. Explain your answer.

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Superfry Limited is a new company that will produce and sell air fryers. The company will sell to three distinct types of customers: specialist kitchen shops, main supermarkets and other retailers. In June 2023, the business is expected to have the following sales revenues: Customer Type June sales revenue '000 Specialist kitchen shops 2 Main supermarket retailers 5 Other retailers 10 The following additional information is provided: (i) Market research has been conducted and the expected monthly compound sales growth is expected to be constant for the next four months as follows: Specialist kitchen shops: (!!) 5 per cent; Main supermarket retailers: 4 per cent; 3 per cent. Other retailers: In order to stimulate sales and meet sales growth targets, it has been decided to offer the following credit periods to customers: Specialist kitchen shops: 1 month; Main supermarket retailers: Other retailers: 2 months; (!!!) (iv) 3 months. Superfry Limited is a small business in the growing market for air fryers. The company currently has a small credit control department, with little or no experience in following up with any late payments from customers. Inventories of components used in the construction of air fryers are purchased from a local supplier with a lead time of 4 weeks on average. Superfry Limited is a new company that will produce and sell air fryers. The company will sell to three distinct types of customers: specialist kitchen shops, main supermarkets and other retailers. In June 2023, the business is expected to have the following sales revenues: Customer Type June sales revenue '000 Specialist kitchen shops 2 Main supermarket retailers 5 Other retailers 10 The following additional information is provided: (i) Market research has been conducted and the expected monthly compound sales growth is expected to be constant for the next four months as follows: Specialist kitchen shops: (!!) 5 per cent; Main supermarket retailers: 4 per cent; 3 per cent. Other retailers: In order to stimulate sales and meet sales growth targets, it has been decided to offer the following credit periods to customers: Specialist kitchen shops: 1 month; Main supermarket retailers: Other retailers: 2 months; (!!!) (iv) 3 months. Superfry Limited is a small business in the growing market for air fryers. The company currently has a small credit control department, with little or no experience in following up with any late payments from customers. Inventories of components used in the construction of air fryers are purchased from a local supplier with a lead time of 4 weeks on average.