Total types of retail stores =

Total product lines for distribution =

Days per year = 260

Business day per week = 5

Expected average retail sales transation per costomer purchase =

Expected average unit sale per costomer purchase =
Expected average customer traffic/retial store per day =
Expected average number of customers who will purchase product =
Expected average number of customers who will purchase product daily =

Cost of display unit (large) = $ 35.00

Cost of display unit (small) = $ 18.00
Number of product units (large packs) 180
Number of product units (small packs) 92

Number of partipants (of total)

High performers 40%
Medium performers 20%
Low performers 40%

Exclusive orders (large) = 45%

Exclusive orders (small) = 55%

Sales Region Total Number of Target Retailers Initial 20%

Eastern 320000 64000
Midwestern 290000 58000
Western 210000 42000

Total 820000 164000

After one year test period the other 80% will be contacted

Sales Region Total Number of Target Retailers The other 80%

Eastern 320000 256000
Midwestern 290000 232000
Western 210000 168000

Total 820000 656000

Period Total number of Retailers selling

0 - 6 months 49200
6 months - 1 year 27060
1 year - 1.5 year 223860
1.5 year - 2 years 135300
3 years 135300
4 Years 135300

Question 4

Total partipants the first 6 months= 49200

Total partipants the second 6 months= 27060
Number of large orders for 6 months = 8.088888889
Number of small orders ofr 6 monthrs = 15.82608696

First 6 months
Number of participants Average sale units daily
High performers 19680 11.20
Medium performers 9840 8.40
Low performers 19680 5.60

Total 49200

45% large order participants

8856
4428
8856

Grand Total 22140

 Second 6 months

All orders in the second 6 months are reorder

Therefore large orders = 8
Small orders = 16

Number of participants
High performers 10824
Medium performers 5412
Low performers 10824

Total 27060

45% large order participants 55% small order partipants

4870.8 5953.2
2435.4 2976.6
4870.8 5953.2

Grand Total 12177 14883

Question 5

The total orders in the first year

Initial Orders Reorders
Large packs 22140 189297
Small packs 27060 483021

Profit to PPI = Revenues - Expenditure

Price per large pack = $ 205.00

Price per small pack = $ 115.00

Revenue from large packs in one year = $ 43,344,585.00

Revenue from small packs in one year = $ 58,659,315.00
Total Revenue = $ 102,003,900.00

For three distribution centres

Logistics cost
logistics cost for 3 distribution centres (per order) = $ 10.11

Total large packs logistics cost = $ 2,137,628.07

Total small packs logistics cost = $ 5,156,918.91
Total logistics cost = $ 7,294,546.98

Production cost
Production cost per large order = $ 190.00
Production cost per small order = $ 98.00

Total large packs production cost = $ 40,173,030.00

Total small packs production cost = $ 49,987,938.00
Total production cost = $ 90,160,968.00

Display Cost
Large pack cost per display = $ 35.00
Small pack cost per display = $ 18.00

Number of displays is eqaul to the numer of larger order participants and small order partipants (1 display): Therefore

Number of large displays = 22140

Number of small displays = 27060

Total large packs display cost = $ 774,900.00

Total small packs display cost = $ 487,080.00
Total display cost = $ 1,261,980.00

Total expenditure in one year = $ 98,717,494.98

Tatal profit with 3 distribution centres = $ 3,286,405.02

If four distribution centres are used

Total revenues = $ 102,003,900.00

Logistics Cost
logistics cost for 4 distribution centres (per order) = $ 9.86

Total large packs logistics cost = $ 2,084,768.82

Total small packs logistics cost = $ 5,029,398.66
Total logistics cost = $ 7,114,167.48

Total production cost = $ 90,160,968.00

Total display cost = $ 1,261,980.00

Total expenditure = $ 98,537,115.48

Tatal profit with 4 distribution centres = $ 3,466,784.52

Based on the results, the profit obtained from the three distribution network is 3,286,405.02, for the four distribution networ
it is 3,466,784.52. This indicates that the 4 distrubtion network, with a psotive difference of $180,739.50

Factors such as ease of doiing business in a location and vehicular traffic may also network decision.
 15
30

$1.40
1.12
100
10%
10

% Average sales Reorder

100% 100%
75% 75%
50% 50%

30% of Initial After 6 months (55%)

19200 10560
17400 9570
12600 6930

49200 27060 0 0
30% of Initial After 6 months (55%)
76800 42240
69600 38280
50400 27720

196800 108240 0 0

(1 initial order and 7 reorder)

(1 intial order and 15 reorder)

Average units 1st 6 months

1,456.00
1,092.00
728.00

55% small order partipants # of initial large packs # of initial small packs # of reorder packs (large)
10824 8856 10824 61992
5412 4428 5412 23247
10824 8856 10824 30996

27060 22140 27060 116235

# of reorder packs (large) # of reorder packs (small)
38966.4 95251.2
14612.4 35719.2
19483.2 47625.6

73062 178596

Total
211437
510081
$ 180,379.50
Question
1 Total number of retailers in the program initially =
1 Total number of retailers in the program after trial period =
2 What the average retailer will sell daily (money) =
2 What the average retailer will sell daily (units) =
2 What the average retailer will sell annually (money) =
2 What the average retailer will sell annually (units) =
3 Number of large packs necessary for the average retailer (annua
3 Number of small packs necessary for the average retailer (annu
4 Orders for 6 months trial period (initial) large packs quantity =
4 Orders for 6 months trial period (initial) small packs quantity =
4 Orders for 6 months trial period (reorder) large packs quantity =
4 Orders for 6 months trial period (reorder) small packs quantity =
4 Orders for the second 6 months period (reorder) large packs qu
4 Orders for the second 6 months period (reorder) small packs qu
5 The profit to PPI if three distribution centres are used =
5 The profit to PPI if four distribution centres are used =

5 Based on the results, the profit obtained from the three distribu
it is 3,466,784.52. This indicates that the 4 distrubtion network

Factors such as ease of doiing business in a location and vehicul

# of reorder packs (small)
162360
60885
81180

304425
 49200
27060
$14.00
11.20
$3,640.00
2912
16.17777778
31.65217391
22140
27060
116235
304425
73062
178596
$ 3,286,405.02
$ 3,466,784.52

obtained from the three distribution network is 3,286,405.02, for the four distribution network
that the 4 distrubtion network, with a psotive difference of $180,739.50

usiness in a location and vehicular traffic may also influence network decisions.