Management Report

TourneSol Canada, Ltd

Case Study of Sunflower Seeds, Oil and Mash

Purpose of the Report

To find the forecasted Cost, Revenue and Profitability with the support of calculations as instructed

Description of the Problem

Provided with the historical data of last 15 year, we need to identify the cost price of seeds and selling
prices of Oil and Mash. Through which revenues and cost are forecasted to have a projected profit

Methodology (which would include the model formulation)

Used three year moving period method to identify the forecasted cost and selling prices as it is a better
model for forecasting the prices of all three seeds, oil and mash as both level of errors is lower than
exponential smoothing.

Forecasted prices of seeds, oil and Mash are 456.67, 1,278.07 & 216.33 respectively

Performed CVP analysis on the results using breakeven revenue, tons and percentage of capacity

Findings or Results

Forecasted cost of seed is 456.67 and it will be used as only Supplier B is feasible for the business which
charges 100% of the average market price of seed

Forecasted Selling price of oil is 1278.07 and it will be used as only Supplier B is feasible for the business
which charges 100% of the average market price of Oil

Forecasted Selling price of mash is 216.33 and it will be used as only Supplier B is feasible for the
business which charges 100% of the average market price of Mash

Expected Volume is 49275 of which 70% is 34492.5 (as required by the contract to place an order)

Revenue per ton is 534.85, Break even Revenue and units are 13,726,926.09 and 25,664.84 units
respectively

Variable cost is 87.25% of the revenue

Profit Margins is 6.11%

Recommendations or Conclusions

As shown by the calculation, supplier B is the only available option which is providing seeds according to
the market needs

It is recommended to purchase required quantity of 34,492.50 tons at the price of 456.667 per ton

Need to process 25,664.84 tons in order to cover all the costs (variable and fixed)

Element of demand is missing in the data which can be a point of uncertainty in doing business

Need to have another supplier so that cost price can be reduced