QUESTION 5 (20 MARKS)

You are newly employed by Shoprite in your area as a supply chain specialist. Shoprite wants to measure the impact of its customer on the business at large. Use the simple Method to calculate the Customer Lifetime Value (CVL) of Shoprites products using the following data (Include practical examples and analysis of the final results):

Total Revenue R120,000,000

Total Number of Customers 8,000,000

Total Number of Orders R2,500,000 (Total Revenue)

Average Order Frequency (AOF) 10

Average Customer Lifespan (ACL) 8 years