Exam code: 9BS0
Read the following extracts (E to H) (opens in a new tab) before answering
Innocent Drinks has constructed the network diagram below to plan the launch of a new line of smoothies. Each number represents how many days each activity is estimated to take
Using the data in the network diagram above, calculate the Earliest Start Times (EST) and Latest Finishing Times (LFT) for each activity and identify the critical path
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Read the following extracts (A to D) (opens in a new tab) before answering
For people in developing countries, purchasing a pair of VisionSpring glasses may be considered as an investment
Using the data in Extract B, calculate the average rate of return from purchasing a pair of glasses. You are advised to show your working
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Read the following extracts (A to C) (opens in a new tab) before answering
Tended Ltd has constructed the decision tree below to help it decide whether to develop a new smartwatch or launch a new marketing campaign
The net gain for the new smartwatch is £1.3 million
Using the data in the decision tree, calculate the net gain for the marketing campaign. State your answer to two decimal places. You are advised to show your working
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Read the following extracts (E to H) (opens in a new tab) before answering
The Chief Executive has calculated the new bathroom project will not meet its payback target of three years
Using the data in Extract F, calculate the difference in the payback period compared to the Chief Executive’s target. You are advised to show your working
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Read the following extracts (E to G) (opens in a new tab) before answering
Explain one limitation of quantitative sales forecasting for Zara
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Read the following extracts (E to H) (opens in a new tab) before answering
Using the information in Extract F, calculate the three period moving averages for the percentage of rooms occupied for the periods March to May and June to August to two decimal places, stating the difference between these moving averages. You are advised to show your working.
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Read the following extracts (E to H) (opens in a new tab) before answering
Buy it Direct’s new Operations Director is in charge of installing a new IT system for the warehouses. This project must be completed within 45 weeks. The Operations Director has produced the following network diagram:
Activity A: Identify problem
Activity B: Consult with software supplier
Activity C: Recruit staff
Activity D: Staff training Activity E: Discuss IT solution
Activity F: Order equipment from suppliers
Activity G: Implementation and testing
Assess the limitations of using Critical Path Analysis (CPA) to manage the installation of the new IT system
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Read the following extracts (E to H) (opens in a new tab) before answering
Assess two limitations for Buy It Direct of carrying out investment appraisal before setting up the new bathroom division
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Read the following extracts (A to D) (opens in a new tab) before answering
Live the Adventure Ltd is deciding whether to expand its existing operations or to offer winter activity holidays in Europe in order to grow
Using the data in Extract D, calculate the values of A, B, C and D and, using other non-financial information, evaluate these two options
Recommend which one of these two options Live the Adventure Ltd should choose in order to grow
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Read the following extracts (E to H) (opens in a new tab)before answering
Using the data in Extracts E to H, Payback and NPV investment appraisal methods, evaluate Plan A and Plan B expansion plans and recommend which one might be better for Northfield Cycles.
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Read extracts A to D before answering questions
Extract A
Aurelia Kitchens Ltd
Aurelia Kitchens Ltd is a privately owned UK manufacturer of premium fitted kitchens. The business designs, manufactures and installs kitchens for domestic customers across the UK. Aurelia positions itself as a high-quality brand, competing on design, durability and customer service rather than low prices.
Aurelia Kitchens Ltd was founded in 2008 by two former furniture designers. The business operates from a single manufacturing site in the West Midlands and employs 165 people. Aurelia sells its kitchens through a network of 12 UK showrooms, all owned by the business.
Demand for fitted kitchens increased during 2020 and 2021, as more people invested in home improvements. Aurelia experienced strong sales growth during this period and expanded its workforce by recruiting additional skilled production workers and installation teams.
Aurelia’s management team believes that long-term growth will depend on improving productivity at its factory and making strategic investment decisions to support future demand.
Extract B
Employment and productivity at Aurelia Kitchens Ltd
Aurelia’s managers are reviewing labour productivity and unit costs. Some experienced workers have raised concerns that recent recruitment has reduced average skill levels on the factory floor, increasing the need for supervision and training.
Extract C
Investment options under consideration
Aurelia is considering investing in new computer-controlled cutting and assembly machinery. The machinery would automate several stages of the production process and reduce reliance on manual labour.
The proposed investment would cost £2.4 million and is expected to last five years, with no residual value. Forecast cash inflows from the investment are shown below.
Aurelia’s management uses a discount rate of 9% when appraising investment projects.
Extract D
Growth strategy
Aurelia’s sales director has suggested expanding into the European market, beginning with Ireland and the Netherlands. This would involve exporting kitchens manufactured in the UK and working with local installation partners.
However, some directors favour focusing on the UK market and increasing capacity at the existing factory. They argue that exporting would increase complexity, currency risk and delivery times, potentially damaging Aurelia’s reputation for customer service.
The directors must decide which growth strategy is most suitable for Aurelia over the next five years.
Using the data in Extract C, assess whether Aurelia Kitchens Ltd should invest in the new computer-controlled machinery.
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