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Homework answers / question archive / 1 Question 41 The Seafood Galore is a-take-out food store at Banana Beach Resort
1 Question 41 The Seafood Galore is a-take-out food store at Banana Beach Resort. Mildred-Sibanyoni, owner of: Seafood-Galore, is deciding how-muchrefrigeration space to devote to four different cool drinks. Pertinent data-on-these-fourcool-drinks are as follows: 1 Selling price per case Coken R18.75 Fanrad R20.504 Schweppese/V/Orange Juice R27.758 R39 304 Variable.cost per case Cases sold perm of shelf space perdaya R13.750 220 R15 603 120 R20.704 66 R30.4000 1394 Mildred has a maximum front shelf space of 12 m' to devote to the four cool drinks. She want a minimum of 1 m -and-a-maximum of 6m of front shelf space for each cool drink. 1 Required: 4.1 Calculate the contribution-margin-per-case of each type of cool drink. 1 42. A co-worker-of-Mildred-recommends that she maximise the shelf.space devoted to those cool drinks with the highest-contribution-margin per case. Evaluate this recommendation, 1 assent be 100 Marks 43 Wher she space location for the four coordrinks would you recommend for the Seafood Galore? show you alculators
In this question, we have to decide the Shelf Space allocation between 4 cool drinks for Seafoodb Galore.
Solution to 4.1
| COKE | FANTA | SCHWEPPES | ORANGE JUICE | |
| Selling price per case (a) | 18.75 | 20.50 | 27.75 | 39.30 |
| Variable cost per case (b) | 13.75 | 15.60 | 20.70 | 30.40 |
| Contribution per case (a-b) | 5 | 4.9 | 7.05 | 8.9 |
Solution to 4.2
According to co-worker, if shelf space is allocated between cool drink which have highest contribution margin per case, then, Seafood Galore have to dedicate most of its shelf space to Orange Juice as its contribution margin per case is highest, then to Schweppes, Coke and Fanta respectively.
| COKE | FANTA | SCHWEPPES | ORANGE JUICE | |
| Contribution per case (a) | 5 | 4.9 | 7.05 | 8.9 |
| ranks | 3 | 4 | 2 | 1 |
|
Shelf Space allocation per metre square (b) |
1 | 1 | 4 | 6 |
|
Cases sold per m2 of shelf space per day (c) |
22 | 12 | 6 | 13 |
| Contribution for the day (a*b*c) | 110 | 58.8 | 169.2 | 694.2 |
note - Allocation of shelf space between 4 cool drinks
Maximum shelf space can be allocated to an drink is 6 metre square and minimum is 1 metre square.
So, according to highest ranking Orange Juice should be allocated maximum space i.e,. 6m, minimum space which must be allocated to a drink is 1 metre, Therefore, Schweppes must be allocated what is left after minimum shelf space distribution between Coke and Fanta i.e., 4 metre.
Total Contribution of Seafood Galore per day is 1032.2 (110 + 58.8 + 169.2 + 694.2) after shelf space is allocated among cold drinks according to highest contribution per case.
Conclusion
Shelf Space allocated according to highest contribution per case is wrong because number of case sold per metre square of every cool drink is not even.
Solution to 4.3
Reccommendation
Shelf Space allocation between four cool drinks should be determined on the basis of total contribution per day per metre square of every drink as shown in table below.
| COKE | FANTA | SCHWEPPES | ORANGE JUICE | |
| Contribution per case (a) | 5 | 4.9 | 7.05 | 8.9 |
|
Cases sold per m2 of shelf space per day (b) |
22 | 12 | 6 | 13 |
| contribution for the day per metre square (a*b) (c) | 110 | 58.8 | 42.3 | 115.7 |
|
Shelf Space allocation per metre square (d) |
4 | 1 | 1 | 6 |
| Contribution for the day (c*d) | 440 | 58.8 | 42.3 | 694.2 |
Total Contribution of Seafood Galores per day is 1235.3 (440 +58.8 +42.3 +694.2) which is 203.1 higher than the contribution for the day calculated above in solution to 4.2.
