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Question 1


H&H is a Singapore-based

tannery that supplies high quality exotic leather to major international fashion houses and customers globally. Tanning is the process of treating skins and hides of animals to produce leather. The three major steps in the production of leather are curing, beamhouse operations and tanning. Due to the increased demand and limited production space, H&H sourced pre-tanned leather (the supplier has already completed the curing and beamhouse operations processes), and raw and untreated skin (another separate supplier). The company has a production area of 7500 sq m.


The weekly demand for tanned leather is at least 22,000 sq ft. There is a supplier who provides H&H pre-tanned leather at three different grade: Grade A, B, and C. After purchasing the pre-tanned leather, H&H will then perform the last step in tanning the leather before shipping it to clients. H&H has a small section within the production facility that could perform curing and beamhouse operations on raw and untreated skin, up to 12,000 sq ft per week. It costs $15 per sq ft for H&H to perform the pre-tanned process while it could purchase up to 10,000 sq ft of grade A pre -tanned leather, 14,000 sq ft of grade B pre-tanned leather, 18,000 sq ft of grade C pre-tanned leather per week at $60 per sq ft, $53 per sq ft, and $46 per sq ft, respectively. It costs H&H $34 per sq ft to purchase raw and untreated skin.


The tanning process will result in shrinkage and the final yield depends on several factors such as the raw skin quality and pre-tanned process quality. 1 sq ft of Grade A pre-tanned leather will result in 0.95 sq ft of finished leather, while 1 sq ft of Grade B pre-tanned leather will result in 0.80 sq ft of finished leather and 1 sq ft of Grade C pre-tanned leather will result in 0.70 sq ft of finished leather. H&H in-house produced pre-tanned leather generally results in a yield of 0.75 sq ft of finished leather for every 1 sq ft of pre-tanned leather. The tanning equipment has the equivalent of 1200 production hours per week. For the tanning process, every sq ft of Grade A, B and C pre-tanned leather would require 1 minute, 2 minutes and 4 minutes, respectively. The in-house produced pre-tanned leather would require 5 minutes per sq ft for the tanning process.


(a) You are just hired as a purchasing officer at H&H. Develop an LP model to minimise the cost of leather purchasing, solve it with Microsoft Excel and make your recommendations, and show the Sensitivity Report. State assumptions you made in formulation if there are any.



Answer the following questions by using the Microsoft Excel solution output you obtained for Question 1(a) and do not re-run your LP model in Excel for the following scenarios.


(b) During the presentation to showcase your recommendation, a colleague raised a query on why the cost of running the tanning machines is not being taken into consideration? The management proposed that you re-run your analysis again noting the cost of running the tanning machines. What is your response to this demand?




(c) Your manager asked you if it makes sense to increase the capacity of the in-house capability in curing and beamhouse operations which currently stands at 12,000 sq ft per week. Interpret the solution output and develop your advice.




(d) Suppose a new tanning technique was developed, and the new technique would reduce the shrinkage loss significantly. With the new tanning process, 1 sq ft grade A leather hardly suffers any shrinkage, while the field for Grade B and Grade C leather will increase to 0.95 sq ft. Interpret the solution output and answer how it will affect your optimal solution.



(e) Due to increases in demand from the China market, your local supplier just informed you that their commitments to you will be cut. They say that they have to reduce the supply of pre-tanned leather unless you are willing to pay more. Interpret the solution output and develop your negotiation strategies.




Question 2


At your company or a company that you are familiar with, identify a managerial problem that LP can/could be applied to help managers make a better decision. Describe the managerial problem and recognise potential problems in formulating the managerial problem in LP. Finally, develop a strategy to overcome the challenges in implementing LP.

You have to explain the application process of LP.




Question 3


Tommy has recently graduated from SUSS and has joined a well-known retailer that operates 3 department stores in Singapore. His job function is that of a business analyst. It has been well-reported that retail business in Singapore is on the decline and his employer would like to determine if the forecast for the next few years will be equally bad. Tommy has been tasked to perform the analysis and his output will provide insights in the company's hiring and expansion plan in Singapore.


The first thing Tommy did was to download the Retail Sales Index data from the Department of Statistics Singapore website. He specifically extracted the data for "Department Stores" from Q1 2008 to Q4 2018. (2017 is set as the base year with Index = 100). Refer to file:

BUS107_GBA_RSIData.xls.


Year/Quarter Retail Sales Index (Department Stores)

2008 1Q 92.4

2008 2Q 93

2008 3Q 84.9

2008 4Q 105.3

2009 1Q 87.1

2009 2Q 88.6

2009 3Q 83.2

2009 4Q 103.6

2010 1Q 94.3

2010 2Q 93.9

2010 3Q 90.7

2010 4Q 109.3

2011 1Q 99.6

2011 2Q 99

2011 3Q 95.8

2011 4Q 119.3

2012 1Q 104.9

2012 2Q 99.9

2012 3Q 95

2012 4Q 117

2013 1Q 106.1

2013 2Q 100.9

2013 3Q 97.5

2013 4Q 118.6

2014 1Q 107.1

2014 2Q 98.7

2014 3Q 95.7

2014 4Q 117.6

2015 1Q 108.2

2015 2Q 101.1

2015 3Q 98.8

2015 4Q 114.4

2016 1Q 103.8

2016 2Q 93.9

2016 3Q 93.2

2016 4Q 112.9

2017 1Q 100.3

2017 2Q 93

2017 3Q 94.6

2017 4Q 112.1

2018 1Q 102.7

2018 2Q 92.3

2018 3Q 93.6

2018 4Q 112.8


Source: https://www.singstat.gov.sg/find-data/search-by-theme/industry/services/latest-data


(a) Use the techniques of time series modelling and with justifications, discuss the considerations on how Tommy would forecast the quarterly Retail Sales Index in 2019 and 2020.



(b) Upon confirmation of the forecast technique to undertake in Question 3(a), determine the quarterly RSI forecast in 2019 and 2020. You are required to show the essential steps in deriving the forecast and comment on any limitations of your technique.

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