ASSIGNMENT HELP | This case study involves Forster’s Market that is a retailer of specialty food items. 

This case study involves Forster’s Market that is a retailer of specialty food items.  This case study is located in your textbook at the end of Chapter 6. You are to read the case study thoroughly and then answer the four questions located at the end of the case study. 

| PLACE YOUR ORDER NOW AT writtask.com |

Ensure you fully answer all four questions to include mapping out the order entry and production planning process as directed in the first question. 

This case study involves Forster’s Market that is a retailer of specialty food items.  This case study is located in your textbook at the end of Chapter 6. You are to read the case study thoroughly and then answer the four questions located at the end of the case study. 

| PLACE YOUR ORDER NOW AT writtask.com |

Ensure you fully answer all four questions to include mapping out the order entry and production planning process as directed in the first question. 

MODEL ANSWER

Coursework Man 3505

In any business venture, business players will always evaluate whether the business will result in | PLACE YOUR ORDER NOW AT writtask.com | emerging competition in the industry, other factors such as costs of investments against possible returns must be considered. Furthermore, typical business players must consider when the business is expected to break even.

Capacity Options that Robbie needs to Consider, the fixed and Variable Costs

The first option that Robbie has s not to invest in the roaster but instead opt to buying from the local | PLACE YOUR ORDER NOW AT writtask.com | is for Robbie to invest in having his own roaster. In that case, he can have 40,0000pds if he goes for a coffee roaster and 14,400pds without considering the coffee roaster.

For this option, the fixed and the relevant variable costs can be given as:

The fixed cost is given as 14,000 * $ 3.00 which gives $ 43,2000

While the variable cost is estimated as 40,000 * $ 1.60 = $ 64,000

The indifference point for the two options can then be presented as

3X = 35,000 + 1.6X; 1.4X = 35,000

The value of X is therefore given as 35,000/1.4 = 25,000pds. From the indifference, it shows that it would cost Robbie less amount to roast on his own when it is more | PLACE YOUR ORDER NOW AT writtask.com | less than this means that he is better off buying rather than roasting.

Decision tree for the Roaster Decision

The Level of demand                         Demand (@ pd per year)

Higher demand                                               35,000 @ 33.3% in a year

Medium demand                                 25,000 @ 33.3% in a year

Low demand                                       18,000 @ 33.3% in a year

To realize better profitability, Robbie has to invest when the demand is | PLACE YOUR ORDER NOW AT writtask.com | that is beyond 25,000 should be desired and act as the bare minimum for business engagement.

Calculating the Expected Value for the Capacity Option

As stipulated before, the highest demand is 35,000

[ 14,000(7) + | PLACE YOUR ORDER NOW AT writtask.com | (1.60)] which generates $ 69,540.

For the medium demand whose value is 25,000

[14,000(7) +(25,000- | PLACE YOUR ORDER NOW AT writtask.com | ) (2.900)] – [35,000 + 1.60 (25,000]

 = $ 131,540 – $ | PLACE YOUR ORDER NOW AT writtask.com | = $ 56,540

Low demand

[14,000 (7) + ( | PLACE YOUR ORDER NOW AT writtask.com | – 14,000) ( | PLACE YOUR ORDER NOW AT writtask.com | )] –[35,000 + 1.60 (18,000)

= [100,800 + 10,440] – [35,000 + 28,000]

= 111.240 – 63,8000

= $ 47,440

On the other hand, the buying option will give the following

14,400 (7) – 14,400 (3)

= 100,800 – 43,200 = $ 57,600.

The probability will be given as

33.3 % of [( | PLACE YOUR ORDER NOW AT writtask.com | ) +33.3 % ( | PLACE YOUR ORDER NOW AT writtask.com | ) + 33.3% of 69, 540; this gives

15,811.75 + 18,844.78 + | PLACE YOUR ORDER NOW AT writtask.com | = $ 57,843.21

From the analysis, it is evident that making his own is cheaper and way better as compared to purchasing.

The Worst Possible Financial Outcome for Foster’s

There | PLACE YOUR ORDER NOW AT writtask.com | notable scenarios that | PLACE YOUR ORDER NOW AT writtask.com | result in worst possible financial outcome for Foster. The worst case however is when there are low demands and the business is experiencing losses. The recorded profits will be in the lowest at $ 47,440. This is unlike in the | PLACE YOUR ORDER NOW AT writtask.com | and higher demand when the profitability levels will be a bit reasonable.

When making his decision, there are | PLACE YOUR ORDER NOW AT writtask.com | specific factors, core competencies, flexibility and other issues that Robbie will have to | PLACE YOUR ORDER NOW AT writtask.com | need for a critical analysis of factors surrounding the possibility of making profits or losses and then decide on whether to….