Question
Part 3 (12 marks) DBS Pizzas & Caf is evaluating the alternative of making some ingredients like fresh dough for their pizzas on their own.
Part 3 (12 marks) DBS Pizzas & Caf is evaluating the alternative of making some ingredients like fresh dough for their pizzas on their own. Currently, these ingredients are being sourced from a contracted external supplier. The relevant information is provided below: For in-house manufacturing: Upfront fixed cost = $250,000 Variable cost per unit (by weight) = $3.75 For purchasing from supplier: Purchase price per unit (by weight) = $8.50 Q7. What should be the requirement to justify continued sourcing from the external supplier? (4 marks) Q8. If the caf manager expects the requirement for these ingredients to be 50,000 units (by weight) next year, then what will be the maximum price per unit (by weight) that DBS Pizzas & Caf should be looking to pay to the contracted external supplier? (4 marks) Q9. DBS Pizzas & Caf are considering a future plan to set up outlets in other locations including overseas. Using one or more relevant examples, explain to the caf manager some of the potential consequences of not understanding or considering non-quantifiable factors like local culture and practices when deciding where to locate future outlets. (4 marks)
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