CASE STUDY MGT 345

GROUP PRESENTATION M

CASE STUDY MGT 345

GROUP PRESENTATION
PREPARED TO: MISS JOLIN NORSHYME BINTI HASHIM

SUBMISSION DATE: 19 NOVEMBER 2021

INTRODUCTION OUTLINE A B C B D E F ADDITIONAL QUESTION CONCLUSION

GROUP MEMBERS M
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

OUTLINE PRESENTATION M
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

a) Find the breakeven point for each location.

Location Fixed Cost Per Year Variable Cost Per Unit

(RM) (RM)
NOTES
Ampang Jaya 200,000 1

Bukit Bintang 180,000 1.75 Selling Price = RM15

Cheras 170,000 3
Formula:
1) Ampang Jaya 2) Bukit Bintang 3) Cheras
BEP = Fixed Cost
200,000 180,000 170,000 SP - VC
15 -1 15 -1.75 15 -3

= 14,285.71 units = 13,584.91 units = 14,166.67 units

INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

b) Based on the break-even point which location is the best ?

Location Fixed Cost Per Year Variable Cost Per Unit Break-even Point
(RM) (RM) (Unit)
Ampang Jaya 200,000 1 14,285.71

Bukit Bintang 180,000 1.75 13,584.91

Cheras 170,000 3 14,166.67

Bukit Bintang is the best location because it has the lowest break-even point of 13,585 units.
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTON CONCLUSION

c) Plot the total cost lines for three (3) potential locations on a single draft.

Step 1 : Create total cost (TC) equation for each location

NOTES
TC Ampang Jaya = 200,000 + 1Q
TC Bukit Bintang = 180,000 + 1.75Q Formula:
TC Cheras = 170,000 + 3Q Total Cost (TC)
TC = FC + (VC x Q)
Step 2 : Match the location and its equation

a) Ampang Jaya = Bukit Bintang

b) Ampang Jaya = Cheras
c) Bukit Bintang = Cheras
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

Continue…

Step 3 : Calculate the quantity and total cost for each location match

a) Ampang Jaya = Bukit Bintang

200,000 + 1Q = 180,000 + 1.75Q

20,000 = 0.75Q
20,000 = Q
0.75
Q = 26,6667.67

TC Ampang Jaya TC Bukit Bintang

= 200,000 + 1Q = 180,000 + 1.75Q
= 200,000 + 1(26,6667.67) = 180,000 + 1.75(26,6667.67)
= RM 226,666.67 = RM 226,666.67
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

Continue...

b) Ampang Jaya = Cheras c) Bukit Bintang = Cheras

200,000 + 1Q = 170,000 + 3Q 180,000 + 1.75Q = 170,000 + 3Q

30,000 = 2Q 10,000 = 1.25Q
30,000 = Q 10,000 = Q
2 1.25
Q = 15,000 Q= 8,000

TC Bukit Bintang TC Cheras

TC Ampang Jaya TC Cheras = 180,000 + 1.75Q = 1700,000 + 3Q
= 200,000 + 1Q = 170,000 + 3Q = 200,000 + 1.75(8,000) = 200,000 + 3(8,000)
= 200,000 + 1(15,000) = 170,000 + 3(15,000) = RM 194,000 = RM 194,000
= RM 215,000 = RM 215,000
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INTRODUCTION OUTLINE A BA C D E F ADDITIONAL QUESTION CONCLUSION
R
Continue...

Step 4: Construct a graph

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d) Over what range of annual volume (output) is each location the preferable one ? M

a) 1 – 7999 units = Cheras is the best location because it has the lowest cost.

b) 8001 – 26,666.67 units = Ampang Jaya is the best location because it has the lowest cost.

c) 27,000 and above = Bukit Bintang is the best location because it has the lowest total cost.
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

e) If the owner is expecting to serve 2,000 plates per year, which is the best location ? A

1) Break-even point of Ampang Jaya 3) Break-even point of Cheras

= 200,000 0 = 170,000 0
(15 x 2,000) – (1x 2,000) (15 x 2,000) – (3 x 2,000)

= 200,000 = 170,000
28,000 24,000

= 7.14 unit 2) Break-even point of Bukit Bintang = 6.79 unit

= 180,000 0
(15 x 2,000) – (1.75 x 2,000)

= 180,000
26,500

= 6.79 unit
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

f) Determine the profit for each location based on the estimated annual production. H

The profit of 2,000 plate per year. The estimated profit of 25,000 plate per year.
1) Ampang Jaya 1) Ampang Jaya

= (15 x 2,000) – RM 200,000 + (1 x 2,000) = (15 x 25,000) – RM 200,000 + (1 x 25,000)

= 30,000 – 200,000 + 2,000 = 375,000 – RM 200,000 + 25,000
= - RM 168,000 = RM 200,000

2) Bukit Bintang 2) Bukit Bintang

= (15 x 2,000) – RM 180,000 + (1.75 x 2,000) = (15 x 25,000) – RM 180,000 + (1.75 x 25,000)
= 30,000 – 200,000 + 3500 = 375,000 – 180,000 + 43,750
= - RM 146,500 = RM 238,750

3) Cheras 3) Cheras

= (15 x 2,000) – RM 170,000 + (3 x 2,000) = (15 x 25,000) – RM 170,000 + (3 x 25,000)

= 30,000 – 170,000 + 6,000 = 375,000 – 170,000 + 75,000
= - RM 134,000 = RM 280,000
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

Analyze non-tangible factors based on the rating for each factor at each locations. A

Factors Rank Weight Locations

Ampang Jaya Bukit Bintang Cheras
Affluence of local 4 10 3 30 2 20 4 40
population
Construction and 4 10 4 40 5 50 4 40
Land Cost
Traffic Flow 1 25 3 75 2 50 4 100
Parking Availability 2 20 4 80 5 100 5 100
Potential for Growth 3 15 5 75 4 60 5 75
Total Score 300 280 355
Rank 2 3 1
Merit 2 1 3

The best choice of intangible factors is Cheras because it has the highest score.
INTRODUCTION OUTLINE A B C D E F ADDITIONAL QUESTION CONCLUSION

CONCLUSION A