Intermediate: Allocation of shop space based on key factors Z ltd is a rataller with a number of shops selling a variety of merchandise. The company is seeking to determtne the optimum allocation of selling space in its shops. Space is devoted to ranges of merchandise in modular units, each module occupying seventy square metres of space. Either one or two modules can be devoted to each range. Each shop has seven modular units.

Z Ltd has tested the sale of different ranges of merchandise and has determined the following sales productivities:

The contribution (selling price - product cost) percentages of sales of the five ranges are as follows:

Operating costs are £5600 per shop per week and are apportioned to ranges based on an average rate per module.
Required:

(a) Determine the allocation of shop space that will optimize profit. clearly showing the ranking order for the allocation of modules. (13 marks)

(b) Calculate the profit of each of the merchandise ranges selected in

(a) above, and of the total shop. (5 marks)

(c) Define the term 'limiting factor', and explain the relevance of limiting factors in planning and decision-making

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Sales per module per week 1 Module 2 Modules () () Range A 6750 6250 Range B 3500 3150 Range C 4800 4600 Range D 6400 5200 Range E 3333 3667