Study the article provided below and answer the following questions.

QUESTION $1[15$ Marks$]$

South Africans Are Going Green to Escape Incessant

Power Cuts

With the grid collapsing, banks are steppin g in to help finance solar panels and renewables.

JUWI South Africa solar farm next to Elikhulu treatment plant, in Evander, in Aug. Photographer: Guillem Sartorio$/$Bloomberg

Adelaide Changole and Antony Sguazzin

November $9,2023$

With the grid collapsing, banks are steppin g in to help finance solar panels and renewables.

Th e Tin gala lodge is about a six$-$h ou r drive n orth east of Joh ann esburg w h ere th e savann a is dotted with dense clusters

of trees an d shru bs$.$ Locate d in a n ature con servan cy$,$ th e lod ge i s po pu lar with visitors lookin g to tour n earby Kru ger

Nation al Park. But unrelen tin g en ergy cuts h ave made run nin g th e busin ess a con tinu al ch allen ge$.$Wh en th e pow er g oes

off, the toilets don$$t work, the showers don$$t work and that is a major interruption $,$ said $80-$year$-$old owner Tom Joubert.

South Africa h as experien ced intermitten t pow er cuts, kn own locally as load sh eddin g$,$ sin ce $2008,$ but ou tages this year

have escalated to th e poin t wh ere th ey stall f actory operation s$,$ disru pt life an d sn arl traffic for exten ded periods on almos t

daily basis.

Imp osed by state$-$ow n ed p ow er utility Eskom S OC Ltd$.$ In an atte mpt to protect th e grid fro m collapse, th ese blackouts

occur in tw o$-$to$-$f ou r blocks, sometimes multiple times a day. Th e nu mber of ou tages reach ed record levels this year, an d

as of Au gusts, th e u tility$$s en ergy availability factor $$ a measu re of h ow much en ergy th e grid can h an dle $$ w as at $60\%-$

meanin g more than a third of power supply was inaccessible to customers.

While power cuts have eased for now, Eskom has continued to hike energy prices to cover its own rising costs.

Photovoltaic solar panels on the roof of a house in Johannesburg, in Aug. Photographer: Michele Spatari$/$Bloomberg

With n o imme diate fix on th e h orizon, Sou th Af rican s are in creasin gly turnin g to ren ew a ble en ergy, an d th e cou n try$$s

biggest ban ks are steppin g in to h elp. Sin ce th e be gin nin g of th e year, FirstR an d Ltd$,$ Stan d ard Ban k Grou p Ltd$,$ Absa

Grou p Ltd an d N ed ban k Grou p Ltd h ave rolled ou t fin an cin g option s to assist in dividu als an d bu sin esses tran sition to

solar. Th ese efforts, combin ed with govern men t clean$-$en ergy incen tives, are expected to h ave a wider impact: Th anks in

part to private pow er gen eration, th e In tern ation al Mon etary Fu n d predicts th at Sou th Africa$$s n ation al econ omy will grow

by $1\mathrm{.}9\%$ in $2024$ up from an anticipa ted $0\mathrm{.}9\%$ this year.

Orders are already su rgin g$.$ In a post on X$,$ econ omist Gaylor Mon tmasson $-$Clair observed th at Sou th Africa imported $$2\mathrm{.}5$

billion $(47$ billion ran d$)$ w orth of solar pan els, lithiu m$-$ion batteries an d inverters in th e first six month s of $2023,$ compa red

to $$1\mathrm{.}7$ billion total in $2022.$ For h omeown ers, solar in stallations don$$t h ave a set price tag; municipal en ergy bills su gg est

h ow man y pan els an d b atteries migh t be n ee de d$.$ Bu t a syste m with $8$ to $12$ p an els, an in verter an d b attery storag e $$

roughly what$$s needed to power a single house $$ run about $$13,250,$ with smaller installations costing about $$9,800.$

In Joubert$$s case, setting up the $16-$pan el solar installation that will liberate Tingala from Eskom will set him back around

$$18,380.$ He thinks it$$s worth it$.$We want to go off$-$grid so that we can control the power supply,$$ he said, estimatin g he$$d

save about $$750$ a month in energy bills.

To in dividu als an d s mall bu sin ess ow n ers like Jou b ert, Absa h as given ou t $$69$ million i n loan s f or ren ew a ble en e rgy

options, in clu din g solar produ cts$,$ while Stan dard Bank loan ed $$32$ million in th e first eigh t mon ths of this year throu gh its

$$solar$-$f or$-$h om e$$ program, enablin g aroun d $450$ homes to set up installation s$.$

Pan African hired solar installer J UWI South Africa to build a $10-$megawatt, $$8\mathrm{.}13$ million solar farm to power its Elik hulu treatment

plant. Photographer: Guillem Sartorio$/$Bloom berg

Companies are makin g a similar calculus. In May $2022,$ f ed u p with th e Eskom$-$imposed electricity rationin g th at f orced

th e co mp an y to curtail its pow er use by as mu ch as $20\%,$ g old minin g co mp an y Pan African R esou rces Plc decide d to

transition to solar.

Pan African hired solar installer an d ren ew ables developer JU WI South Africa to build a $10-$megaw att, $$8\mathrm{.}13$ million solar

farm to pow er its Elikhulu treatmen t plan t east of Joh ann esburg. Th e plan t$,$ which extracts traces of gold from old mine

waste, now relies on solar to meet a third of its pow er needs.

So f ar$,$ FirstR an d$$s R an d Merch an t Bank h as finan ced $$106$ million w orth of utility$-$scale private pow er projects, an d Absa

has invested $$1\mathrm{.}2$ billion in renewable efforts. Of the $$4\mathrm{.}4$ billion rand that Standard Bank has loaned through its

sustain able fin an ce initiatives, $$58$ million h ave gon e to busin ess installations an d solar providers. Sustain able fin an ce is

$$the fastest growing part of our business,$$ said Standard Chief Executive Officer Sim Tshabalala.

Already, th e Elikhulu project saved Pan African an estimated $$217,600$ in July an d is expected to save th e company up

to $$1\mathrm{.}9$ million annu ally. It$$s also redu ced th e gold producer$$s carbon footprin t by $6\%.$ Pan $-$African i s plannin g to expan d

its solar operation and is developin g a separate renewable$-$run facility to power another mine several hours away.

Already, the Elikhulu project saved Pan African an estimated $$217600$ in July. Photographer: Guillem Sartorio$/$Bloomberg

$$Our ambition is to be $30\%$ renewable energy mix by $2027$ and we have set an ambitious goal to get to $50\%$ by $2030,$

said Barry Naicker, Group ESG Manager at Pan African Resources.

Th e w ork of actu ally in stallin g th ese systems f alls on specialists like Rich ard D ou glas, wh o fou n ded Greenw ay Solar in

Ran dburg seven years ago. In his first year, h e h an dled six installations in total. H e$$s on track to hit $180$ this year, in clu ding

larger$-$scale projects. D ou glas recen tly installed a $200-$kilow att solar plan t at a h orse f arm in n orth ern Joh an n esbu rg$,$ w h ich

can fully pow er th e f ar m$$s op eration s $$ in clu din g an air con ditionin g u nit f or th e ow n er$$s f ou r pet h en s $$ with ou t an y

backu p for up to two days in summer and one in winter.

As deman d grows and technology costs fall, Douglas is considerin g opening a second office. $$The uptake is huge, and it

is being driven by the need for backup power,$$ he remarked.

But in a country th at th e Th omas Piketty$-$backed World In equ ality Lab h as n amed th e w orld$$s most un equ al $,$ n ot all South

Africans are able to simply drop Eskom. Solar aff ordability can determin e$,$ quite literally, w h o h as access to pow er $$ an d

without panels, a generation of South Africans stands to be left behind.

Earlier this year, opposition parties an d th e N ation al Union of Metalw orkers of South Africa su ed th e govern ment on th e

groun ds th at th e pow er cuts w ere denyin g people th eir basic rights to education an d h ealth. Du rin g ou tages, children can$$t

atten d sch ool or access wifi. H ospitals h ave h ad to delay critical operation s an d expensive medical equipmen t h as been

damaged by constant blackou ts an d electricity surges. Th e case, which w as even tu ally dropped, w as on e of at least fou r

filed against the govern m en t over Eskom$$s practice of loadsh ed din g$.$

Solar panels cover car parking spaces at a Makro store, in Johannesburg, in Aug. Photographer: Michele Spatari$/$Bloomberg

For so me Sou th African s$,$ solar can presen t oth er ch allen ges. $60-$year$-$old Th e mbi Elizab eth Math e bula, w h o run s th e

popular Joe$$s Butch ery in Joh ann esburg$$s Alexan dra Township, bou gh t h er first solar pan el f our years ago only to see it

vanish within a f ew month s$.$It cost $16,000$ ran d$,$ sh e told Bloomberg at h er establish ment. $$Once it w as stolen $,$ I said, $$I

don$$t h ave mon ey$,$ let me put a smaller on e$,$ which w as abou t $6,000$ ran d$.$ But wh en w e got loadsh eddin g$,$ thieves ju mped

my fence and took it$.$

Math ebula n ow cools h er meat display with a battery$-$operated chiller an d uses kerosen e an d liqu efied petroleu m ga s to

cook. Sh e also h as a gen erator so sh e can stay open durin g blackouts. But this isn$$t a lon g$-$term solution $$ diesel for th e

generator can costs up to $$32$ a day, and that adds up fast.

Even with the risk of theft, Mathebula is considerin g giving renewable energy another try. I was thinking that I must go to

the bank to ask if they can lend me money.$$

Sou rce: h ttps:$//$w w w $.$blo o mberg.co m$/$n ew s$/$articles$/2023-11-09/$s ou th $-$af rican s$-$are$-$goin g$-$green $-$to$-$esca pe$-$in cessa ntpower$-$cu

ts$?$srn d $=$pre miu m $-$africa

Required:

$1\mathrm{.}1.$ Efficien t electricity man agement is pivotal for achievin g produ ction targets an d sustainin g profitability, makin g it a vital

co mp on en t of oper ation s man ag e men t$.$ Th e escalatin g costs of en ergy, cou pled w ith strin gen t en viron men tal

regulation s an d evolvin g su pply$-$deman d dyn amics, un derscore th e pressin g n eed f or in dustrial organisation s to curtail

en ergy consu mption an d associated expenses. To secure a competitive edge in th e lon g term, firms mu st prioritise

con tin u al en h an ce men ts i n electricity efficien cy across th eir op eration s $($Schulze$,$ N ehler, Ottosson & Th ollan der,

$2016).$

In light of the above $,$ examin e the existin g literatu re to elucidate how effective electricity$/$en erg y man ag em ent can

bolster operation s management. $(4$ marks$)$

$1\mathrm{.}2.$ Th e inf or mation provid ed b elow relates to th e op eration s of g old minin g co mpan y$,$ Pan African R esou rces Plc$,$ in

$2022$ and $2023.$

INFORMATION

$20232022$

Total gold production $175\mathrm{.}209$ ounces $205\mathrm{.}688$ ounces

Revenue R$5701\mathrm{.}0$ million R$5709\mathrm{.}4$ million

Labour costs R$1070\mathrm{.}7$ million $(2469$ employees$)$ R$987\mathrm{.}5$ million $(2193$ employees$)$

Electricity consumption R$505\mathrm{.}2$ million $(1403\mathrm{.}02$TJ$)$ R$512\mathrm{.}7$ million $(1357\mathrm{.}07$TJ$)$

Capital expenditure R$1782\mathrm{.}2$ million R$1031\mathrm{.}3$ million

Other inputs R$197\mathrm{.}3$ million R$909\mathrm{.}7$ million

$1\mathrm{.}2\mathrm{.}1.$ D eter min e Pan African R esou rces$$ gold pro du ction per e mployee $($i$.$e$.,$ labou r pro du ctivity$)$ i n $2022$ an d $2023$

$($roun d off answ er to five decimal places$)$ and comment on th e results obtain ed by su ggestin g probable causes

of the change in labour productivity. $(4$ marks$)$

$1\mathrm{.}2\mathrm{.}2.$ Using the sales revenue to represent the output from the operations, determine Pan African Resources$$

multif actor produ ctivity in $2022$ an d $2023($roun d off answ ers to tw o decimal places$)$ an d commen t on th e results

obtained. $(7$ marks$)$

QUESTION $2[15$ Marks$]$

Study the caselet provided below and answer the following questions.

Th e man ag e men t of DGB Enterprises h as n arrow e d dow n th e site selection f or a n ew man uf actu rin g f acility to th ree

poten tial locations $$ A$,$ B an d C$.$ Th e inf ormation provided below sh ows th e annu al fixed costs an d variable costs per unit

of the product at each of three location s$.$

INFORMATION

Location Fixed costs Variable costs per unit

A R$3000000$ R$50$

B R$4500000$ R$25$

C R$6000000$ R$15$

After an extensive market su rvey, th e operations an alyst of DGB Enterprises h as estimated a R $75$ target sellin g price for

each unit of the produ ct expected to be produ ced at the facility.

Required:

$2\mathrm{.}1.$ Formulate the cost functions for each of the three locations. $(3$ marks$)$

$2\mathrm{.}2.$ Using a range of production output of $0200000$ units at intervals of $5000$ units, plot the total production cost curves

of the three locations on the same graph. $(5$ marks$)$

$2\mathrm{.}3.$ Formulate the profit functions for each of the three locations. $(3$ marks$)$

$2\mathrm{.}4.$ Determin e the profits of the three locations for an estimated production and sales volume of $175000$ units per year.

$(3$ marks$)$

$2\mathrm{.}5.$ Based on the estimated production and sales volume of $175000$ units per year, which of the three location s would

you recommen d for the location of the new manufacturin g facility? $(1$ marks$)$

END OF PAPER