SECTION A

MARKS$]$

Answer ALL questions in this section.

Based on the information provided below, answer questions $1$ and $2$ below.

Modern Business Hardware Enterprise $($MBHE$)$ is a prominent retailer of electronic devices and systems, operating in a

Southern African country. In a bid to reassess its strategic direction, MBHE recently engaged an operations management

consultant to evaluate its operations strategy. The consultant's report highlighted among others the following critical

insight:

'While MBHE's historical approach, characterised by a top$-$down, externally neutral stance and a focus on

operational proactivity, has served its purpose over the past five years, it is now inadequate to address the evolving

competitive landscape. With the emergence of innovative and technologically adept competitors, MBHE's

management is urged to pivot towards a next$-$level operations strategy. This new integrated approach should

leverage MBHE's operational resources to their fullest potential, aligning closely with market demands and drawing

upon the operational improvements made in recent years. Moreover, MBHE needs to cultivate internally supportive

operations capabilities that seamlessly integrate with its corporate strategy to position the business as a leader in

the sector.$\text{'}$

Current inventory policy

MBHE currently applies the Economic Order Quantity $($EOQ$)$ model as an inventory management tool. Among others,

MBHE stocks a certain switch connector at its central warehouse for supplying field service offices. The annual demand

for these connectors stands at $60000$ units. MBHE estimates the annual holding cost for this item of inventory to be R$50$

per unit and the cost to place and process an order from the supplier amounts to R$150.$ It operates $300$ days per year and

the lead time to receive an order from the supplier is two full working days.

Embracing servitisation

MBHE's management is actively exploring servitisation as a strategic avenue to broaden its competitive offerings. This

would entail transitioning from conventional product$-$centric sales to offering holistic solutions to enhance customer value,

encompassing installation, maintenance, and supplementary value$-$added services in conjunction with its hardware

offerings.

QUESTION $1$

$(20$ Marks$)$

$1\mathrm{.}1.$ By scrutinising the key findings of the consultant's report through the lens of Wheelwright and Hayes'

$(10$ marks$)$

$(1984)$ four$-$stage model of operations strategy, identify and critically discuss the current stage of MBHE's

operations strategy, and delineate actionable steps for advancing to the next stage.

$1\mathrm{.}2.$ Comprehensively discuss the integrated four perspectives of operations strategy advocated in the

$(10$ marks$)$

consultant's report as an alternative to MBHE's current predominantly top$-$down perspective.

QUESTION $2$

$(20$ Marks$)$

REQUIRED: Assume that you are an operations analyst at MBHE, and you have been assigned the

following tasks:

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

$(4$ marks$)$

$2\mathrm{.}2.$ Determine the annual costs of carrying the switch connectors at MBHE's central warehouse.

$(3$ marks$)$

$2\mathrm{.}3.$ Determine MBHE's annual ordering costs of the switch connectors.

$(3$ marks$)$

$2\mathrm{.}4.$ What is the reorder point of the switch connectors?

$(3$ marks$)$

$2\mathrm{.}5.$ Examine the strategic implications of adopting servitisation to expand MBHE's competitive offerings.

$(7$ marks$)$

Provide in$-$text citations to support your discussion.