QUESTION $2$

$(20$ Marks$)$

$2\mathrm{.}1.$According to the article, "the company blossomed and grew to $2,227$ stores across South Africa,

$(6$ Marks$)$

Botswana, eSwatini, Lesotho, Namibia, Nigeria, Zambia and Zimbabwe."

Discuss any six $(6)$ probable reasons why Pick $n$ Pay has internationalised its domestic operations to Botswana, eSwatini, Lesotho, Namibia, Nigeria, Zambia and Zimbabwe.

$2\mathrm{.}2.$Suppose Pick $n$ Pay sells $2500000$ units annually of a popular product within its Namibian operations. The cost to place, process, and receive an order from the supplier is R$100$ per order, and the cost to carry each unit of the product in the distribution center is R $0\mathrm{.}20$ per year. The acquisition cost of the product from the supplier is R$50$ per unit. Assume these costs remain constant throughout the year.

REQUIRED:

Using the information provided above, answer the following questions:

$2\mathrm{.}2\mathrm{.}1.$ Calculate the economic order quantity $($EOQ$)$ for the product.

$(3$ Marks$)$

$2\mathrm{.}2\mathrm{.}2.$ Based on the EOQ model, calculate the total annual ordering cost and the total annual carrying cost

$(5$ Marks$)$

for the product.

$2\mathrm{.}2\mathrm{.}3.$A prospective supplier has proposed supplying $625000$ units of the product at the beginning of

$(6$ Marks$)$

each quarter at a $2\%$ cash discount. Accepting this proposal would increase the annual carrying cost per unit to R$4\mathrm{.}50$ due to the need to expand the distribution center's capacity. The cost to place, process, and receive an order will remain R$100$ per order. Should Pick n Pay Namibia accept this proposal? Justify your decision by showing all relevant calculations.