QUESTION TWO (30 MARKS) Study the information provided below and answer the questions which follow: INFORMATION Shop n Pay is a fast-growing diversified South African-based retailer dealing in fast moving consumer goods (FMCGS). The recently-appointed operations manager of Shop n Pay, Mr Benedict Msimanga, is currently reviewing all operations management policies of the company and has gathered the following information: A Internationalisation strategy With the recent conclusion of the African Continental Free Trade Agreement (AFCFTA), the company is in the process of expanding its operations to key markets on the African continent. Countries on the radar of Shop n Pay include Kenya, Tanzania and Ethiopia in East Africa, and in West Africa, Ghana, Ivory Coast and Senegal. Market research has revealed that the four countries have favourable tax policies, stable electricity network, relatively good road network and investor-friendly business environment. B. Inventory management The current policy is to order 100,000 units when the inventory level falls to 35,000 units. However, forecast demand to meet market requirements for next year is 625,000 units. The cost of placing and processing an order is R250, while the annual cost of holding a unit in stores is 5% of the unit purchase price. Both costs are expected to be constant during the next year. Shop n Pay sells a unit of the product for R15.00 at cost plus 50%. Orders are received two weeks after being placed with the supplier. You should assume a 350-day year and that demand is constant throughout the year. C. Forecasting and other supply chain activities A recent report produced by Shop n Pay's chief demand planner has revealed that the retailer's reliance on simple exponential smoothing to forecast demand for its products is partly responsible for the significant bullwhip effect in the supply chain and the stock outs in the past few years. In this regard, the chief demand planner is recommending that exponential smoothing with trend adjustment (Holt's Model) should be used to forecast demand for aggregate planning for the 2020 fiscal year. Mr Msimanga has retrieved from the retailer's database the following information on number of goods sold over a two year period Year Monthly sales ('000 units) Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2018 650 700 820 850 700 840 930 630 860 600 2019 750 800 900 920 680 950 1080 742 920 705 Nov Dec 750 1050 1100 820 2.1 REQUIRED: Discuss any Six (6) factors motivating Shop on the African continent. (6 marks) Pay's internationalisation of its operations to other countries 22 REQUIRED Study the information provided above under section B: Inventory management and answer the following questions: Calculate the economic order quantity (EQ). Calculate the total cost of the current ordering policy and determine the savings that could be made should Shop n Pay switch to using the economic order quantity model. (6 mars 2.2.1 2.2.2 (4 marks 23 REQUIRED Use the information provided above under section C: Forecasting and other supply chain activities to answer the following questions: "A recent report produced by Shop n Pay chief planner has revealed that the retailer's reliance on simple exponential smoothing to forecast demand for its products is partly responsible of the significant pile-up of goods in the company's main distribution centre." 2.3.1 In light of the statement above, highlight any THREE (3) weakness of the simple exponential smoothing method of forecasting, (3 marks) 2.3.2 Calculate the Exponential smoothing with trend component forecast (FIT) for second to the twenty-fifth month using an initial trend forecast (T) of 10 000, an initial exponential smoothing forecast (F) of 640 000 units, a = 0.20, nd p = 0.B5)marks) Plot the actual demand, the simple exponential smoothing (SES) forecast, and trend-adjusted exponential smoothing (FIT) forecast on the same graph. Briefly comment on the observed difference(s) between the plots of the two forecasts. (5 marks) 2.3.3 PROJECT GUIDELINES . . . . . Your work (excluding table of contents, cover page, diagrams, and appendices) must not exceed 5000 words. Your work must include a Table of Contents page as well as an assignment cover page. Text: Font: Arial or Arial Narrow (12), Spacing: 1.5 lines All text must be justified at each margin. All your discussions must be supported by relevant theories and literatures references, and must demonstrate the highest degree of rigour and relevance as expected of a postgraduate level academic paper. Note that you are to include at least 8 literatureisobiscesignment. Therefore, you are expected to conduct an extensive review of the literature beyond the confines of the module guide, to include relevant peer-reviewed journal articles, books, etc. You are encouraged to use current academic sources in all your discussions. Wikipedia and personal blogs are not considered as reputable academic sources and should not be used. You are required to provide a list of references: One single alphabetical list of all references cited in the text, containing in all cases full bibliographic details: author; date; title; publication; volume and issue of journal, where applicable; pages of journal article, where applicable; publisher; city; as well as full details of internet report author; title; URL of internet site and date on which internet site was accessed. We prescribe the use of the Harvard referencing system. . QUESTION TWO (30 MARKS) Study the information provided below and answer the questions which follow: INFORMATION Shop n Pay is a fast-growing diversified South African-based retailer dealing in fast moving consumer goods (FMCGS). The recently-appointed operations manager of Shop n Pay, Mr Benedict Msimanga, is currently reviewing all operations management policies of the company and has gathered the following information: A Internationalisation strategy With the recent conclusion of the African Continental Free Trade Agreement (AFCFTA), the company is in the process of expanding its operations to key markets on the African continent. Countries on the radar of Shop n Pay include Kenya, Tanzania and Ethiopia in East Africa, and in West Africa, Ghana, Ivory Coast and Senegal. Market research has revealed that the four countries have favourable tax policies, stable electricity network, relatively good road network and investor-friendly business environment. B. Inventory management The current policy is to order 100,000 units when the inventory level falls to 35,000 units. However, forecast demand to meet market requirements for next year is 625,000 units. The cost of placing and processing an order is R250, while the annual cost of holding a unit in stores is 5% of the unit purchase price. Both costs are expected to be constant during the next year. Shop n Pay sells a unit of the product for R15.00 at cost plus 50%. Orders are received two weeks after being placed with the supplier. You should assume a 350-day year and that demand is constant throughout the year. C. Forecasting and other supply chain activities A recent report produced by Shop n Pay's chief demand planner has revealed that the retailer's reliance on simple exponential smoothing to forecast demand for its products is partly responsible for the significant bullwhip effect in the supply chain and the stock outs in the past few years. In this regard, the chief demand planner is recommending that exponential smoothing with trend adjustment (Holt's Model) should be used to forecast demand for aggregate planning for the 2020 fiscal year. Mr Msimanga has retrieved from the retailer's database the following information on number of goods sold over a two year period Year Monthly sales ('000 units) Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2018 650 700 820 850 700 840 930 630 860 600 2019 750 800 900 920 680 950 1080 742 920 705 Nov Dec 750 1050 1100 820 2.1 REQUIRED: Discuss any Six (6) factors motivating Shop on the African continent. (6 marks) Pay's internationalisation of its operations to other countries 22 REQUIRED Study the information provided above under section B: Inventory management and answer the following questions: Calculate the economic order quantity (EQ). Calculate the total cost of the current ordering policy and determine the savings that could be made should Shop n Pay switch to using the economic order quantity model. (6 mars 2.2.1 2.2.2 (4 marks 23 REQUIRED Use the information provided above under section C: Forecasting and other supply chain activities to answer the following questions: "A recent report produced by Shop n Pay chief planner has revealed that the retailer's reliance on simple exponential smoothing to forecast demand for its products is partly responsible of the significant pile-up of goods in the company's main distribution centre." 2.3.1 In light of the statement above, highlight any THREE (3) weakness of the simple exponential smoothing method of forecasting, (3 marks) 2.3.2 Calculate the Exponential smoothing with trend component forecast (FIT) for second to the twenty-fifth month using an initial trend forecast (T) of 10 000, an initial exponential smoothing forecast (F) of 640 000 units, a = 0.20, nd p = 0.B5)marks) Plot the actual demand, the simple exponential smoothing (SES) forecast, and trend-adjusted exponential smoothing (FIT) forecast on the same graph. Briefly comment on the observed difference(s) between the plots of the two forecasts. (5 marks) 2.3.3 PROJECT GUIDELINES . . . . . Your work (excluding table of contents, cover page, diagrams, and appendices) must not exceed 5000 words. Your work must include a Table of Contents page as well as an assignment cover page. Text: Font: Arial or Arial Narrow (12), Spacing: 1.5 lines All text must be justified at each margin. All your discussions must be supported by relevant theories and literatures references, and must demonstrate the highest degree of rigour and relevance as expected of a postgraduate level academic paper. Note that you are to include at least 8 literatureisobiscesignment. Therefore, you are expected to conduct an extensive review of the literature beyond the confines of the module guide, to include relevant peer-reviewed journal articles, books, etc. You are encouraged to use current academic sources in all your discussions. Wikipedia and personal blogs are not considered as reputable academic sources and should not be used. You are required to provide a list of references: One single alphabetical list of all references cited in the text, containing in all cases full bibliographic details: author; date; title; publication; volume and issue of journal, where applicable; pages of journal article, where applicable; publisher; city; as well as full details of internet report author; title; URL of internet site and date on which internet site was accessed. We prescribe the use of the Harvard referencing system