You are on page 1of 23

Introduction

The Co-op Supermarket located in the central of the city It is a place for HCMC people, Vietnamese and international tourist visiting and shopping. As a manager, I hope that the suggestions below would give some help for Coopmark development, and selecting project investment will bring lots of profits for Coopmark Corporation

1. Forecasting Techniques:
Last four weeks sales of clothes and shoes (in $000s): Day Monday Tuesday Thursday Friday Week 1 Week 2 Week 3 Week 4 22 36 48 61 22 34 42 49 58 24 38 43 49 62 26 38 45 50 64

Wednesday 40

Saturday 58 59 58 58 Three models required by Marketing Director of Co.op supermarket are processed by following methods: * Additive model: With data table above, data will be processed by following tables: Actual (Y) 22 36 40 48 61 58 22 34 42 49 58 59 24 38 43 49 62 58 26 38 45 50 64 Moving total of Trend six day's output (T) Seasonal variation (Y-T)

Week 1

Week 2

Week 3

Week 4

Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday

265 265 263 265 266 263 264 266 270 271 271 275 274 276 276 278 279 281 281

44.17 44.17 43.83 44.17 44.33 43.83 44.00 44.33 45.00 45.17 45.17 45.83 45.67 46.00 46.00 46.33 46.50 46.83 46.83

3.83 16.83 14.17 -22.17 -10.33 -1.83 5.00 13.67 14.00 -21.17 -7.17 -2.83 3.33 16.00 12.00 -20.33 -8.50 -1.83 3.17

Saturday

58

Then we will cacualte the averages of each day of 4 weeks (from Monday to Saturday): Monday Tuesday Week 1 Week 2 Week 3 Week 4 Average -22.17 -21.17 -20.33 -21.22 -10.33 -7.17 -8.50 -8.67 Wednesday -1.83 -2.83 -1.83 -2.17 Thursday 3.83 5.00 3.33 3.17 3.83 Friday 16.83 13.67 16.00 15.50 Saturday 14.17 14.00 12.00 13.39

We can realize that the revenue in Monday is less Tuesday Wednesday

21,220 than average revenue. 8,670 2,170

Thursday is more 3.830 than average revenue. Friday 15,500 Saturday 13,390 Forecast for week 5: The trend rose by: 46.83 - 44.17 = 2.66 An average of trend: 2.66 : 18 = 0.15 x Monday Tuesday Wednesday Thursday Friday Saturday Trend 47.28 47.43 47.57 47.72 47.87 48.02 y Seasonal -21.33 -8.78 -2.28 3.72 15.39 13.28 z Forecast Sales 25.94 38.65 45.30 51.44 63.26 61.30

With x = 46.83 + (0.15*3) in Monday Similarly, from Tuesday to Saturday x = 46.83 + (0.15 * 4, 5, 6, 7 and 8) z = x + y ; forecast sales are already caculated. 1. Multiplicative model: Actual (Y) 22 36 40 48 61 Trend (T) Seasonal (Y/T)

Week 1

Monday Tuesday Wednesday Thursday Friday

44.17 44.17

1.087 1.381

Week 2

Week 3

Week 4

Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday

58 22 34 42 49 58 59 24 38 43 49 62 58 26 38 45 50 64 58

Week 5

43.83 44.17 44.33 43.83 44.00 44.33 45.00 45.17 45.17 45.83 45.67 46.00 46.00 46.33 46.50 46.83 46.83 46.98 47.13 47.28

1.323 0.498 0.767 0.958 1.114 1.308 1.311 0.531 0.841 0.938 1.073 1.348 1.261 0.561 0.817 0.961 1.068 1.362

Then we caculate the average from Monday to Saturday of each week (four weeks). Week 1 Week 2 Week 3 Week 4 Average Monday Tuesday Wednesday Thursday 1.087 0.498 0.767 0.958 1.114 0.531 0.841 0.938 1.073 0.561 0.817 0.961 1.068 0.530 0.808 0.952 1.085 Friday 1.381 1.308 1.348 1.346 Saturday 1.323 1.311 1.261 1.298

Next we caculate the Final estimate of average for each day of 4 weeks: Mon Tues Wed Thur Fri x Estimated average daily variation 0.530 0.808 0.952 1.085 1.346 y Adjustment to reduce ~ total variation to 0 1.003 1.003 1.003 1.003 1.003 z Final estimate of average daily variation 0.473 0.195 0.051 0.082 0.342 y= 6.020 : 6 z= x-y

Satur 1.298 1.003

Total 6.020

0.295

So the minus (-) of z expess the less revenue in Monday, Tuesday and Wednesday than average revenue, in other habd wih Thursday, Friday and Sartuday. Forecast for week 5: Week 1 Week 2 Week 3 Week 4 The trend rose by: 46.83 - 44.17 Monday 22 22 24 26 = 2.66 An average of trend: 2.66 : 18 = Tuesday 36 34 38 38 0.15 Wednesday 40 42 43 45 Thursday 48 49 49 50 2. The least squares Friday 61 58 62 64 X Saturday Y 58 59 58 58 Monday 1 22 regression: Seasonal F.Sales 2 Trend Tuesday 36 -21.33 31.23 52.57 Wednesday 3 40 -8.78 44.38 53.16 Thursday 4 48 -2.28 51.47 53.75 Friday 5 61 3.72 58.07 54.34 6 58 15.39 Saturday70.33 54.94 7 22 13.28 Monday68.81 55.53
Tuesday 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 34 42 49 58 59 24 38 43 49 62 58 26 38 45 50 64 58 Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday Monday Tuesday Wednesday Thursday Friday Saturday

We can use each fomular from Monday to Saturday to caculate the R max: X Monday Tuesday Wednesday Thursday Week 1 1 22 36 40 48 Week 2 2 22 34 42 49 Week 3 3 24 38 43 49 Week 4 4 26 38 45 50 Week 5 5 27 39 46.5 50.5 R max 29.5 41.5 46.5 50.5 Finally, the first method (additive model) so the most reliable result.

Friday 61 58 62 64 64.5 68.75

Saturday 58 59 58 58 56.75 56.75

2. Management Information Systems (task 2)


Co-op Supermarket has the service sector; they focus on rather trading goods than manufacturing. They have been also one of the most successful supermarkets in Vietnam up to now. With the large operation scale nowadays, they should change to manage information by a comprehensive computerized system. First, the outline of the managing information system is very necessary to set up a new computerized system. There are three typical information levels: Strategic level: The main function here is to ensure changes in the external environment are matched by the organizations capabilities. Human judgment is a main force here because machines cannot set up strategy. Operations in this level include seeking new investment, evaluating quantity of clients and competitors. Besides, they also do the research about customers behaviors based on their total revenue. For example, in the first floor, they mainly sell expensive and luxury products, they have to manage all information in this floor carefully and effectively. They will forecast the sales growth and market share in this executive due to the practical details. Especially, the demands elasticity is high because they are luxury goods. Thus, strategic level need to analysis information and make accurate forecast in time in order to get the sufficient plan. In the second and third floor, they sell essential goods, which have medium or small the elasticity of demand. Information managers do not need to focus on information in these floors too much. However, essential consuming products are the strength of supermarket. They also concern about any changes or fluctuations to maintain the total revenue and control the profit. In the Fourth floor, this can be called the extra floor because they sell service totally in this floor instead of products. Strategic sector has an objective about manage information and even the tendency or liking of customer in order to widen service in this floor. Tools used mainly in this sector are Management information system (MIS), Executive Support System (ESS), Decision Support System (DSS), Profit planning. Tactical levels: help middle managers monitor and control. These systems check if things are working well or not, due to bills, accounting papers, etc. Secondly, they are also responsible for the management, allocation about workforce, such as quantity of employees in each area. Last but not least, they also assess their staffs performance. In supermarket, employees are integral because customers always need helps when they go shopping. Supervisors have to make a sufficient allocation in each sector, each floor. In this case, they have focus on the second, third, and fourth floors because the quantity of clients is quite high there, especially in the fourth floor. Clients do not want to

wait too long for the order, charge, etc. However, the first floor also needs employees who have the best performance, and skills. Customers in this floor have high income, and the service affects to their choice directly. Supervisors can use these methods, such as Management information system (MIS), Decision Support System (DSS), Sale region analysis in order to get their objectives. Operation level: can help operational managers track the organizations day-today operational activities. Operational decisions are essentially small-scale and programmed, and operational information is often highly formal and quantitative. They will collect all feedbacks from clients and summarize them for supervisors to use more easily. Moreover, they have responsibility to collect bills or receipt. Besides, controlling account and credit card of customers is also necessary nowadays, when supermarkets service has improved so much. This is the main function in all four floors. Especially, they have responsibility to receive all feedbacks and comments from clients in the fourth floor because they sell service there. In order to collect all information about revenue, clients comments, they can use Order processing, Material control, Cash management.

3. Inventory control:
Order band A up to 3,000 packs B 3,000 < 4,000 C 4,000 < 5,000 D 5,000 < 20,000 E 20,000 or more Discount (%) 0 5 10 17.5 18 New Unit Price ($) 0.50 0.475 0.45 0.4125 0.41

Economic order quantity EOQ based upon above figure table is caculated:

2CoD EOQ = = Ch

2 5 75000 = 2739 20 % 0.5

Packs

But currently: 2750 packs Holding cost: 2750/2 x (20% x 0.5) = 137.5 $ And order cost : (75000/2750) x 5 = 136.363$ Total cost : 137.5+136.363 = 273.863$ However according to EOQ Holding cost: 2739/2 x (20% x 0.5) = 136.95 $ And order cost: (75000/2739) x 5 = 136.911$ Total cost: 136.95+136.911 = 273.861$ Finally, the saving revenue can be: 273.863 273.861 = 0.002$

Purchasing cost: 3000 $ 37500 3001 $ 35625 33750 30937.5 30750 4001 $ 5001 $ 20001 $

Ordering Units Purchasing Cost (A) 0.5 x 75000 (B) 0.475 x 75000 (C) 0.45 x 75000 (D) 0.4125 x 75000 (E) 0.41 x 75000

Holding cost: (A) (20% x 0,5) 136.95 (B) (20% x 0.475) (C) (20% x 0.45) (D) (20% x 0.4125) (E) (20% x 0.41)

130.1025 123.255 112.984 112.3

Note: (20% x 0.5) x X = 136.95 X= 136.95 : (20% x 0.5) = 1369.5 then continue to caculate for (B), (C), (D), (E) by 1369.5 x (20% x 0,475; 0,45; 0,4125; 0,41)
Ordering cost at 5 $: We have 5 levels of 27,38 orders: 25 75000 : 2739 = 27,38 18,75 15 3.75

136.911 125* 93.75* 75* 18.75*

75000 : 3000 = 25 75000 : 4000 = 18,75 75000 : 5000 = 15 75000 : 20000 = 3.75

(*) Note: to find (*) just: 25 x 136.911 : 27,38 (follow arrow directions) then similarly caculate for next figures. Finally, we can caculate: (A): 37500 + 136.95 + 136,911 = 37773,86$ (B): 35626 + 130,1 + 125 = 35881,1$ (C): 33750 + 123.255 + 93.75 = 33967,01$ (D): 30937.5 + 112.984 + 75 = 31125.48$ (E): 30750 + 112.3 + 18.75 = 30881.05

Co-op Supermarket, the manager currently orders 2,750 packs at a time, so Co-op Supermarket will have to pay $37773.85 . But if the manage orders more than 20,000 packs at a time , they just will have to pay $30881.05, so Co-op Supermarket can save money (37773.85 30881.05= 6892,81$). The managers should order more 20000 packs in order to saving more money.

4. MATERIAL REQUIREMENT PLANNING


End Item

E (2)

G (2)

F (3) 1. End item: End Lead Item: item times Lot L4L size: Gross requirement Scheduled receipt On hand inventory Net requirement Planned order receipts Planned order releases

F (3)

F (3)

period 1 0 0 60 0 0 0 2 0 0 60 0 0 0 3 0 0 60 0 0 0 4 0 0 60 0 0 240 5 0 0 60 0 0 0 6 300 0 0 240 240 0

60

Based on the scenario, 300 units of the End item are required in Period 6. Therefore the total need of the End items is 300 at period 6, the on hand inventory of End item is 60 units.

On hand inventory of period = on hand inventory + schedule receipt gross requirement On hand inventory at the end of period 1 = 60 + 0 0 = 60 units On hand inventory at the end of period 2 = 60 + 0 0 = 60 units On hand inventory at the end of period 3 = 60 + 0 0 = 60 units On hand inventory at the end of period 4 = 60 + 0 0 = 60 units On hand inventory at the end of period 5 = 60 + 0 0 = 60 units On hand inventory at the end of period 6 = 60 + 0 300 = -240 units Net requirement = Gross Requirement (Project on Hand + Schedule Receipts) Net requirement = 300 (60 + 0) = 240 units Therefore, the End item will need 240 units, so the company needs to order from its suppliers 240 units. Because the lead time is 2, Coopmark needs to order before 2 periods at period 4. 2. Item A: Lead times

Item:

period 1 0 0 0 0 0 200 2 0 0 0 0 0 0 3 240 40 0 200 200 0 4 0 0 0 0 0 0 5 0 0 0 0 0 0 6 0 0 0 0 0 0

Lot L4L size: Gross requirement Scheduled receipt On hand inventory Net requirement Planned order receipts Planned order releases

In order to make one End item, a company will need one item A. So based on the result, to have 240 units of End item, the company will need 240 units of A item. The total need of item A is 240 units.

Schedule receipts are 40 units of Item A in period 3. Therefore, the net requirement of Item A = 240 (0 + 40) = 200 units So, because of the need of 200 units of item A, the company has to order 200 items of A unit from its suppliers. Since the lead time is two, the company will need to order before 2 periods at period 1.

Item C: Lead times

Item:

period 1 0 0 100 0 0 0 2 0 0 100 0 0 140 3 240 0 0 140 140 0 4 0 0 0 0 0 0 5 0 0 0 0 0 0 6 0 0 0 0 0 0

Lot L4L size: Gross requirement Scheduled receipt On hand inventory Net requirement Planned order receipts Planned order releases

100

To make one End item, the company also needs to have one item C. According to the result above, the company needs 240 units of End item, it also needs 240 units of item C. So, gross requirement of Item C is 240 units.

On hand inventory of Item C is 100 units, so: o On hand inventory at the end of period 1 = 100 + 0 0 = 100 units o On hand inventory at the end of period 2 = 100 + 0 0 = 100 units o On hand inventory at the end of period 3 = 100 + 0 240 = -140 units

Net requirement = 240 (100 + 0) = 140 units

Therefore, the company needs to order 140 units of Item C from its suppliers. The lead time is 1, company will order before 1 period at period 2.

3. Item G: Item: G Lead 1 times period 1 0 0 0 0 0 0 make 1 2 3 4 5 6 0 0 20 0 0 0

Lot Multiple size: 300 Gross requirement Scheduled receipt On hand inventory 0 Net requirement Planned order receipts Planned order releases According to the scenario, to

0 280 0 0 0 0 0 0 0 20 20 20 0 280 0 0 0 300 0 0 300 0 0 0 Item C, it needs to have 2 Item G,

therefore, the amount of Item G = 140 x 2 = 280 units. So gross requirement of Item G is 280 units. Schedule receipt = 0 On hand inventory = 0 Therefore, net requirement = 280 (0 + 0) = 280 units. However, with this item, the company has order sizes in multiple of 300 units. So that, each times, company will order 300 units of Item G. Because lead time is 1, so the company would order before 1 period at period 2. 4. Item E: Item: E Lead times 1 period 1 0 0 2 0 0 3 700 0 4 0 0 5 0 0 6 0 0

Lot Multiple size: 400 Gross requirement Scheduled receipt

On hand inventory Net requirement Planned order receipts Planned order releases

100

100 0 0 0

100 0 0 800

200 600 800 0

200 0 0 0

200 0 0 0

200 0 0 0

Item E is needed to produce Item A and Item G; 1 Item A needs 2 Item E and 1 Item G needs 1 Item E. Therefore, gross requirement of Item E = 2 x 200 + 300 = 700 units.

Schedule receipt = 0 On hand inventory of Item E is 100. On hand inventory at the end of period 1 = 100 + 0 0 = 100 On hand inventory at the end of period 2 = 100 + 0 0 = 100 On hand inventory at the end of period 3 = 100 + 0 700 = -600

Net requirement = 700 (100 + 0) = 600 units. However, with Item E, the company has order sizes in multiple of 400 units. Because each time, Item E are needed for both Item A and G, therefore, the company needs to order 400 x 2 = 800 units.

Lead time is 1, so company has to order before 1 period at period 2.

6. Plan order report: Summary of Plan Order Report 1 2 3 4 0 0 0 240 200 0 0 0 0 140 0 0 0 300 0 0 0 800 0 0

Period End item Item A Item C Item G Item E

5 0 0 0 0 0

6 0 0 0 0 0

If the company wants to have 300 units of End item, it needs to have other items too. To have enough items for the production, the company uses lot-for-lot and multiple methods to order them. These methods have both advantages and

disadvantages. For example, when using lot-for-lot method, the manufacturer Activity A B C J M L must consider
Latest time event Earliest time event Duration of the Float time activity

14 0 30 0 03 0 34 30 38 34 36 0 the lead-time carefully, if the

12 02 03 27 02 01 02 02 02 02 08 24 estimation of lead-time is not

accurate or not suitable, it may lead to the late delivery, causing impact to the progress of others process. For multiple method, the problem is the increasing of cost. For examples, with item G, the production only needs 280 items G, but the company still orders 300 items; with item E, the production only needs 700 items, but the company still orders 800 items. So the cost for item G and item E would increase Refer to the Appendix for more information about Material Requirement Planning.

5 Project plan:
The numbers are the expected durations in weeks. The critical path is D,E,F,G,H,I,K. Total expected duration = 3 + 8 + 3 + 12 + 4 + 4 + 4 = 38 weeks

Network analysis

From week 1 to week 2, we need 11 people for the project at the same time.

In week 3, we need 10 people for the project at the same time. From week 4 to week 8, we need 6 people for the project at the same time. From week 9 to week 11, we need 4 people for the project at the same time. In week 12, we need 5 people for the project at the same time. From week 13 to week 14, we need 2 people for the project at the same time. From week 15 to week 25, we need 5 people for the project at the same time. From week 27 to week 30, we need 2 people for the project at the same time. From week 31 to week 32, we need 4 people for the project at the same time. From week 33 to week 34, we need 2 people for the project at the same time. From week 35 to week 36, we need 4 people for the project at the same time. From week 37 to week 38, we only need a person for the project at the same time.

Comment:
Keeping the project within the given budget, it is ideally that no more than five personnel should be involved in the project at a specific time. But based on the Resouce Histogram, we can see that in the beginning weeks, it requies more than five personnel to work at the same time. So Coopmark should increase the budget a little bit to make it finish on time.

6. Investment Appraisal Techniques:


Project A $200,000 B $230,000 C $180,000

Initial cost

Expected life Scrap value expected Expected cash inflows End year 1 2 3 4 5 cost of capital: THE FIRST WAY: 0 A B C
-200000 -230000 -180000

5 years $10,000 $ 80,000 70,000 65,000 60,000 55,000


r=

5 years $15,000 $ 100,000 70,000 50,000 50,000 50,000


0.18

4 years $8,000 $ 55,000 65,000 95,000 108,000

1
80000 100000 55000

2
70000 70000 65000

3
65000 50000 95000

4
60000 50000 108,0 00

5
65000 65000

NPV A B C
IRR A B C

16,990 -10,348 26,817

22% 16% 25%

higher than 18% (approved projects) less than 18% (reject projects) higher than 18% (approved projects)

THE SECOND WAY:


Present Value A B C 0 -200000 -230000 -180000 1 67797 84746 46610 2 50273 50273 46682 3 39561 30432 57820 4 30947 25789 55705 5 28412 28412

NPV(A)= NPV(B)= NPV(C)= 8)

16,990 (10,34 26,817

>0 <0 >0

approved projects reject projects approved projects

Comment: Based on the data table, we see project A with the initial cost is 200000$, carried out within 5 years and the estimated capital recovery in each year is: Year 1: 80000$ Year 2: 70000$ Year 3: 65000$ Year 4: 60000$ And the amount of capital recovery and liquidation in year 5 is 65000$ thereby the estimated NPV (Net present value) of project A is (16,990 > 0) and IRR (internal rate of return) is 22%, higher than the cost of capital 4%. Project B with the initial cost is 230000$, carried out within 5 years and the estimated capital recovery in each year is: Year 1: 100000$ Year 2: 70000$ Year 3: 50000$ Year 4: 50000$ And the amount of capital recovery and liquidation in year 5 is 65000$ thereby the estimated NPV (Net present value) of project B is (-10,348< 0) and IRR (internal rate of return) is 16%, lower than the cost of capital 2%. Project C with the initial cost is 180000$, carried out within 4 years and the estimated capital recovery in each year is: Year 1: 55000$ Year 2: 65000$ Year 3: 95000$ And the amount of capital recovery and liquidation in year 4 is 108000$ thereby the estimated NPV (Net present value) of project B is (26,817> 0) and IRR (internal rate of return) is 25%, lower than the cost of capital 7%. A projects or plan of many projects, if wants to be accepted and invested should achieve four factors below: - IRR must be the largest because it shows the percentage of interest that the project can bear to exist and make profit. - Initial cost must be at least because it demonstrates a high feasibility of the project. Less capital investment but high profitability. - The payback time is fast, brings benefits for business. - The performed duration is shortest. So the project which achieves enough four factors to be invested is project C and project A.

Conclusion:
Based on the report above, hopefully Coopmark will be able to assign the work easily for the construction of modern eateries. Besides, Coopmark can decide the profit, interest of project investment from the calculation of NPV and IRR. In addition, Coopmark can predict the income daily and weekly.

REFERENCES
1. Edexcel HNC and HND Business, 2004.Business Decision Making, London: BPP professional Education 2. Pearson Custom Publishing & West Chester University, Custom Program for Computer Information Systems (CSC 110), (Pearson Custom Publishing, 2009) 3. Kock, N., Gray, P., Hoving, R., Klein, H., Myers, M., & Rockart, J. (2002). Information Systems Research Relevance Revisited: Subtle Accomplishment, Unfulfilled Promise, or Serial Hypocrisy Communications of the Association for Information Systems