You have been asked to prepare a report for Mrs Watson on the strategic position Sara Tea Pty Ltd should pursue. The business wants to increase its market share in the baking area. You need to present a response at the next board meeting. Areas you need to address:
a) Identify STPL’s competitive advantage
b) Identify fours threats and four opportunities available to STPL
c) Identify four strengths and four weaknesses for STPL
d) Evaluate STPL objectives for their strategic plan.
e) Use Porter’s generic strategies to recommend a strategy for STPL?
Question 2 (20 marks)
STPL is considering acquiring Pie Smiles, a small chain bakery that specialise in making gourmet pies. A sales manager from Pie Smiles has provided the following forecast of sales:
| Year | Sales ($) |
| 2020 | 9,000 |
| 2021 | 9,900 |
| 2022 | 10,360 |
| 2023 | 11,260 |
| 2024 | 11,680 |
| 2025 | ? |
Required:
- Using exponential smoothing with a weight of a =0.3, develop forecasts for years 2021 through to 2025. (3 marks)
- Using smoothing constants of 0.6 and 0.9, develop forecasts for the sales of pies. (3 marks)
- What effect did the smoothing constant have on the forecast for the sale of pies? (3 marks)
- Use a 3-year moving average forecasting model to forecast the sales of pies. (3 marks)
- Using the trend projection model, develop a forecasting model for the sales of pies. (3 marks)
- Which is the preferred method to predict the sales of pies: exponential smoothing with a smoothing constant of 0.3, a 3-year moving average or a trend line? In your response justify why you made that choice. (5 marks)
Question 3 (15 marks)
The purchasing manager Jack Cruise, who is also Mrs Watson nephew, has a very relaxed approach to purchasing ingredients. Jack places orders every week for the same amount of ingredients. He finds that this way if he doesn’t turn up to work there will still be a plentiful supply of raw materials. Jill has just started as Jack’s assistant and believes that ordering could be done more efficiently. She has devised the following table to prove her point:
| Scenario | |||||
| 1 | 2 | 3 | 4 | 5 | |
| Annual Demand | 234,000 | 234,000 | 234,000 | 234,000 | 234,000 |
| Cost per purchase order | $81.00 | $81.00 | $81.00 | $81.00 | $81.00 |
| Carrying cost per package per year | $11.70 | $11.70 | $11.70 | $11.70 | $11.70 |
| Quantity per purchase order | 900 | 1,500 | 1,800 | 2,100 | 2,700 |
| Number of purchase orders per year | |||||
| Annual ordering costs | |||||
| Annual carrying costs | |||||
| Total annual inventory costs | |||||
Required:
- Using Excel, complete the table. What is the economic order quantity (EOQ)? Comment on your results? (4 marks)
- Prepare a graphical analysis of the EOQ decision. (3 marks)
- STPL is about to introduce a Web-based ordering system for its customers that Jill estimates will reduce STPL’s ordering costs to $49 per purchase order. Calculate the new EOQ and the new annual ordering and carrying costs. (4 marks)
- Prepare a graphical analysis of the new EOQ decision and comment on the differences. (4 marks)
Online submission via Turnitin is required for this assignment. Details will be provided by your subject lecturer.
