FORMATIVE ASSESSMENT $2[100$ MARKS$]$

Read the insert below and answer the questions that follow

Procter & Gamble $($P&G$)$ is a multinational consumer goods corporation and one of the world's largest and most recognized

companies in its industry. Founded in $1837$ by William Procter and James Gamble, the company has grown to become a

global leader in the production and marketing of a wide range of household and personal care products. P&G is known for

its extensive and diverse portfolio of consumer goods, including beauty and grooming products, health and wellness items,

household care, and baby care products. Some of its well$-$known brands include Pampers, Tide, Gillette, Pantene, Olay,

and Crest. Procter & Gamble is a global consumer goods giant with a rich history, a diverse product range, and a

commitment to innovation and sustainability. Its household brands are fixtures in many homes worldwide, reflecting its

influence and impact on the consumer goods industry.

Jon R Moeller, the CEO of Procter and Gamble $($P&G$)$ has requested your services in responding to some of the strategic

issues facing the operations management function of the organisation. He has provided you with a number of scenarios that

the organisation has been exposed to and thus requests that you draft a report providing the best response in dealing with

each scenario.

Scenario Description Response

weighting

$1.$ One of the regional offices of P&G$,$ located in Malawi, assembles, and sells premium

diapers $($pampers brand$).$ The supplies for the product are procured from various

manufacturers worldwide. Most of the components are procured from wholesalers in

Southern Africa, some critical items, such as wool, come directly from their manufacturer

based in Asia. For instance, the wool is shipped directly from Asia using agents who

submits an order release once every $4$ weeks. P&G$$s annual requirements total $500$ units

$(2$ per working day$),$ and P&Gs per unit cost is R$1,500.$ The suppliers always promise

delivery within $1$ week following receipt of an order release, there has never been any

experiences of material shortages $($lead time amounts to $5$ working days.$)$

The CFO has been informed that the costs related to inventory include the purchase cost,

which amount to R$500$ per order, also included are the actual labor costs involved in

ordering, customs inspection, arranging for airport pickup, and delivery to the plant,

maintaining inventory records. The costs of holding of storage, damage, insurance, taxes,

and so forth categorised as holding costs are determined on a square$-$metre basis. These

equal R$150$ per unit per year. With added emphasis being placed on efficiencies in the

supply chain, P&G$$s CEO has asked you to evaluate costs associated to inventory control

of wool as it presents opportunities of improved cost savings. Advise on the ideal number

of units of wool that should be ordered to minimise costs, in addition comment on the ROP

for wool given the information provided. Lastly, indicate the downside of depending on the

EOQ model for an organisation such as P&G$.$

$($Make use of relevant calculations and examples when answering questions.$)$

$(20)$

$2$ P&G operates a dozen retail shops in Johannesburg, South Africa. Their signature item is

a hamper including baby diapers and baby oil. Sales $($x$,$ in millions of rands$)$ are related to

Profits $($y$-$hat, in hundreds of thousands of rands$)$ by the regression equation y$-$hat $=7\mathrm{.}21$

$+1\mathrm{.}76$ x$.$

Considering this determine the forecasted profit for a store with sales of R$10$ million and

R$30$ million respectively.

$(10)3$ As an analyst you have been requested to utilise the exponential smoothing technique to

predict merchandise returns in one of the branches for P&G$.$ Given an actual number of

returns of $154$ items in the most recent period completed, a forecast of $172$ items for that

period, and a smoothing constant of $0\mathrm{.}3,$ determine the forecast for the next period? And

comment on how the forecast would change if the smoothing constant were adjusted to

$0\mathrm{.}6?$ Your response should clearly explain the differences in terms of responsiveness.

$(10)$

$4$ P&G is deciding on where to locate its new factory which will be responsible for serving

four grocery stores, each with a demand of $10,000$ units. If the coordinates of the stores

are $(108,112),(110,50),(40,85),$ and $(10,25).$

Given the information provided advise the CEO on the qualitative factors that P&G needs

to consider in selecting the best location. Quantitatively determine the best location in

which the factory should be placed. Suppose now that the demand for each store

increases by $200\%$ where should the new factory be positioned in this case?

$(20)$

$5.$ The following supply, demand, cost, and inventory data $($provided below$)$ has been made

available to you by the CEO. He has requested you to allocate production capacity for

P&G to meet demand at minimum cost using the transportation method. Determine the

cost of the plan. Assuming the initial inventory has no holding cost

$6$ In the context