Comprehensive Analysis of Purchasing and Distribution Strategies

This report comprehensively analyzes purchasing and distribution strategies, incorporating elements of big data analysis and inventory management. It begins by examining factors influencing monthly ridership, regression statistics, and the best-fit line, offering short-term and long-term recommendations. The report then delves into inventory management, comparing different order quantity plans and highlighting the optimal order quantity, alongside the application of Just-in-Time inventory approaches. A detailed break-even analysis is presented, outlining fixed and variable costs, unit pricing, and profit calculations across various sales volumes. The report also contrasts traditional and activity-based costing methods and explores alternative pricing strategies. Finally, it discusses the 6 V's of big data and its applications in various industries, particularly in supply chain management and fraud detection, providing a robust overview of key concepts in purchasing, distribution, and data-driven decision-making. The report utilizes references to support its findings.

PURCHASING AND
DISTRIBUTION

TABLE OF CONTENTS
QUESTION- 1.................................................................................................................................1
QUESTION- 2.................................................................................................................................2
QUESTION- 3.................................................................................................................................2
QUESTION- 5.................................................................................................................................5
a) 6 characteristics of big data.....................................................................................................5
REFERENCES................................................................................................................................7

QUESTION 1
A
There are many factors influencing the number of monthly riders and there are the price,
population and income (Zhu and et.al., 2018). Out of all these factors the most significant factor
is the price as if the price will be too high then this will reduce the number of cycle riders. The
other factors are being eliminated from the model because of the reason that these are not much
essential for the effective calculation of the data.
B
Regression
Statistics
Multiple R 0.069
R Square 0.005
Adjusted R
Square -0.016
Standard Error 8.807
Observations 49
The value of the R square is 0.005 which is very low. The meaning of R- square is that the
because of change in the value of the independent how much of the change is being undertaken
within the dependent factors. This is very essential as R square predicts the ratio between the
dependent and independent variable.
C
The formula for best fit line is =
Y= mx + b
And in accordance to this the residual is 435284.53
D
As the short term strategy it is recommended to the company that they must work on marketing
of the bicycle riding in effective and efficient manner. This is pertaining to the fact that when the
marketing will be good then this will attract majority of the consumers.
For the long term strategy it is advisable to the company that they must reduce the prices to a
little extent. This is pertaining to the fact that when the prices will be reduced then this will
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attract more of the consumers and will increase profitability of the company (Ghani and et.al.,
2019).
QUESTION- 2
Plan 1 Plan 2 Plan 3 Optimal
Order quantity 500 2000 3000 3000
Number of Orders per year 870 218 145 145
Average inventory level 435285 435285 435285 435285
Annual inventory holding cost
£13,05,85,500.0
0
£13,05,85,500.0
0
£13,05,85,500.
00
£13,05,85,50
0.00
Annual ordering cost £8,70,000.00 £2,18,000.00 £1,45,000.00 145000
Purchasing cost £1,74,11,400.00 £1,65,40,830.00
£1,56,70,260.0
0 15670260
Total cost
£14,88,66,900.0
0
£14,73,44,330.0
0
£14,64,00,760.
00 146400760
a) The optimal order quantity is the one at which the company is incurring the minimum costs
and are able to save some part of the holding and ordering costs. At the ordering quantity of 3000
units the company has the lowest sum of inventory holding, ordering and the purchasing cost
post the discounts availed by the management of the company (Cárdenas-Barrón and et.al.,
2020).
b) Apart from the economic order quantity the company can apply the Just in Time approach of
inventory management where they shall be able to order the inventory as soon as they are
demanded by the manufacturing department. In this the holding costs or storage costs of the
company shall be saved and also the problem of over and understocking can be avoided by the
management of the company.
QUESTION- 3
Fixed costs £40,00,000.00
Variable costs
per unit £80.00
Unit Price £120.00
Volume of
bicycles Fixed costs
Variable
costs Total costs Income Net profit
50000 £40,00,000.00
£40,00,000.
00
£80,00,000.
00
£60,00,000
.00 £(20,00,000.00)
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60000 £40,00,000.00
£48,00,000.
00
£88,00,000.
00
£72,00,000
.00 £(16,00,000.00)
70000 £40,00,000.00
£56,00,000.
00
£96,00,000.
00
£84,00,000
.00 £(12,00,000.00)
80000 £40,00,000.00
£64,00,000.
00
£1,04,00,00
0.00
£96,00,000
.00 £(8,00,000.00)
90000 £40,00,000.00
£72,00,000.
00
£1,12,00,00
0.00
£1,08,00,0
00.00 £(4,00,000.00)
100000 £40,00,000.00
£80,00,000.
00
£1,20,00,00
0.00
£1,20,00,0
00.00 £-
110000 £40,00,000.00
£88,00,000.
00
£1,28,00,00
0.00
£1,32,00,0
00.00 £4,00,000.00
120000 £40,00,000.00
£96,00,000.
00
£1,36,00,00
0.00
£1,44,00,0
00.00 £8,00,000.00
130000 £40,00,000.00
£1,04,00,00
0.00
£1,44,00,00
0.00
£1,56,00,0
00.00 £12,00,000.00
140000 £40,00,000.00
£1,12,00,00
0.00
£1,52,00,00
0.00
£1,68,00,0
00.00 £16,00,000.00
150000 £40,00,000.00
£1,20,00,00
0.00
£1,60,00,00
0.00
£1,80,00,0
00.00 £20,00,000.00
160000 £40,00,000.00
£1,28,00,00
0.00
£1,68,00,00
0.00
£1,92,00,0
00.00 £24,00,000.00
170000 £40,00,000.00
£1,36,00,00
0.00
£1,76,00,00
0.00
£2,04,00,0
00.00 £28,00,000.00
180000 £40,00,000.00
£1,44,00,00
0.00
£1,84,00,00
0.00
£2,16,00,0
00.00 £32,00,000.00
190000 £40,00,000.00
£1,52,00,00
0.00
£1,92,00,00
0.00
£2,28,00,0
00.00 £36,00,000.00
200000 £40,00,000.00
£1,60,00,00
0.00
£2,00,00,00
0.00
£2,40,00,0
00.00 £40,00,000.00
210000 £40,00,000.00
£1,68,00,00
0.00
£2,08,00,00
0.00
£2,52,00,0
00.00 £44,00,000.00
220000 £40,00,000.00
£1,76,00,00
0.00
£2,16,00,00
0.00
£2,64,00,0
00.00 £48,00,000.00
230000 £40,00,000.00
£1,84,00,00
0.00
£2,24,00,00
0.00
£2,76,00,0
00.00 £52,00,000.00
240000 £40,00,000.00
£1,92,00,00
0.00
£2,32,00,00
0.00
£2,88,00,0
00.00 £56,00,000.00
250000 £40,00,000.00
£2,00,00,00
0.00
£2,40,00,00
0.00
£3,00,00,0
00.00 £60,00,000.00
260000 £40,00,000.00
£2,08,00,00
0.00
£2,48,00,00
0.00
£3,12,00,0
00.00 £64,00,000.00
270000 £40,00,000.00
£2,16,00,00
0.00
£2,56,00,00
0.00
£3,24,00,0
00.00 £68,00,000.00
280000 £40,00,000.00
£2,24,00,00
0.00
£2,64,00,00
0.00
£3,36,00,0
00.00 £72,00,000.00
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290000 £40,00,000.00
£2,32,00,00
0.00
£2,72,00,00
0.00
£3,48,00,0
00.00 £76,00,000.00
a) The traditional and activity based costing are the two separate methods of ascertaining the
costs of the products of the company. The traditional costing uses a single cost driver and
allocates the overheads to the direct costs of the product based on the average rate. All the
overheads of the company are allocable based on the single activity and a single rate like the
direct labour hours used in the manufacturing of the products.
Whereas on the contrary the activity based costing method is now generally used by the
companies where there are multiple cost drivers for the allocation of the overheads. Each and
every overhead costs are allocated based on the separate level of activity. This helps in proper
cost distribution to the products and services of the company and also assists in identifying the
inefficient areas of the business.
b)
Fixed costs= 4000000
Unit price= 120
4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
-5000000
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
Column D Column E
Column F

Variable cost per unit= 80
Contribution margin= 40
Break-even point= Fixed costs / Contribution margin
= 4000000/ 40
= 100000 units
In value= 100000*120= 12000000
The implications of the break-even point for the business is that this is the minimum
point of sales level that the company has to ascertain in order to survive in the market since they
shall be able to cover the costs of the business. This is level where there is no profit and no loss
for the operations of the business (Liao and Li, 2021).
c) Apart from the cost plus pricing strategy the company can use various other pricing strategies
to assume the benefit of market share and increase the profitability of the business. The company
can use competitor pricing which shall help in generating competitive advantage in the market. It
can also go for value based pricing providing the worth to the customers for the goods and
services they are purchasing. Lastly the market penetration pricing strategy can be applied by
selling the goods at lower costs so that the higher market share can be captured by the business.
QUESTION- 5
a) 6 characteristics of big data
There are 6 V's that can define the data storage and processing under the Big Data. These
are applied by the various companies in order to use the available the information to the best of
their capacity such that the future of the business can be efficiently predicted and profitability
can be generated for the business. The various characteristics of the big data are explained
below:- Volume- The volume of the data and information is the most relevant characteristic for
the big data as higher is the availability of such data deeper can be the insights related to
it. Also, there is a direct relationship between the size of such data and the processing
capacity that is possessed by the organization. In the current scenario the data is
associated with those who are travelling or are working in the city as they are to be
targeted. The statistics are gathered from various sources suppliers, customers and the
project generated data. This data that is collected shall assist in the targeting process of
the company.
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 Variety- The wide variety of data that is available also plays significant role in the
processing, analysing and drawing conclusions on the basis of it. Nowadays, many
sources are available from online to offline, audio, video, GPS data, graphics, web
search, social media networks etc. This shall be facilitating the better conceptual
understanding of the details.
 Velocity- Velocity is another characteristic that can be used for the processing of the
rapidly changing and diversified data of the business. The real time availability of the
data has to be capitalized to assume its benefit for the operations of the business. It
involves both the structured and the unstructured information that are analysed by the
company.
 Another characteristic of the big data is value that is the value which they get from the
data and how big the data will result from the stored data. This is a characteristic which
states that the data being collected must be of value and fulfil the aim and objectives of
the study.
 In addition to this another characteristic of big data is veracity that reflects the quality of
the data allowing it to be considered as the conflicting and provides information relating
to the matters which are not sure in how to deal with them.
 Along with this the last characteristic is variability which reflects the fact that up to
which extent is he structure of the data is changing. This also involves the fact that how
well the meaning of the data is being provided by the data.
 B
 The big data application is applicable in many of the industries and this is very helpful
and assistive in effective management of the data.
 Big data analytics capability (BDA) is the best technique which is being implemented
and assistive to company in managing the procurement and supply chain in proper and
effective manner (Saggi and Jain, 2018). Another major application of the big data analytics in supply chain management is the
detection of the fraud. This is particularly because of the reason that when the company is
able to effectively manage the data then this will help them in proper detection of the
fraud.
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REFERENCES
Books and Journals
Zhu, L., and et.al., 2018. Big data analytics in intelligent transportation systems: A survey. IEEE
Transactions on Intelligent Transportation Systems, 20(1), pp.383-398.
Ghani, N.A., and et.al., 2019. Social media big data analytics: A survey. Computers in Human
Behavior, 101, pp.417-428.
Saggi, M.K. and Jain, S., 2018. A survey towards an integration of big data analytics to big
insights for value-creation. Information Processing & Management, 54(5), pp.758-790.
Liao, H. and Li, L., 2021. Environmental sustainability EOQ model for closed-loop supply chain
under market uncertainty: A case study of printer remanufacturing. Computers &
Industrial Engineering. 151. p.106525.
Cárdenas-Barrón, L. E. and et.al., 2020. An EOQ inventory model with nonlinear stock
dependent holding cost, nonlinear stock dependent demand and trade credit. Computers
& Industrial Engineering. 139. p.105557.
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