A-AS Level (CIE) Business Studies Paper-2: Specimen Questions with Answers 12 - 14 of 52

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Question 12

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Short Answer▾

Explain the terms:

a. Segmentation

Explanation

Market segmentation is the process of dividing a heterogeneous market into homogeneous sub-unit. Example- A firm decided to launch the product for the urban male customer. Market segmentation helps a business in competing in a highly competitive market. A successful marketer, knows that all elements of the marketing mix are imitable. Eventually, competition will catch up and, at the end of the day, it will be a promotion and price war. To be able to overcome this threat from competition, successful marketers always segment their markets, position themselves in a segment, they perceive they will be able to defend against competition attacks and emerge as the segment leader.

Passage

Case Study-7

A company՚s requirement for ten days are 6,300 units. The ordering cost per order is $ 10 and the carrying cost per unit is $ 0.26. The following is the dis-countable schedule applicable to the company.

The Following is the Discountable Schedule Applicable to the Company
No. of orders12345678910
Order in size630031502100157512601050900787.5700630
Av. inventory315015751050787.5630525450393.7350315
Carrying cost8194102732051641371171029182
Order cost102030405060708090100
Total cost829430303245214297187182181182
Less: discount31518995956363----
Total cost after discount514241208150151234187182181182
The Following is the Discountable Schedule Applicable to the Company
Lot SizeDiscount per unit ($)
1 - 999

1000 - 1499

1500 - 2499

2500 - 4999

5000-and above

0

0.010

0.015

0.030

0.050

Question 13 (1 of 5 Based on Passage)

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Short Answer▾

Determine the economic order of the company

Explanation

The economic order without considering discount is:

Question 14 (2 of 5 Based on Passage)

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Short Answer▾

When should a firm place order to replenish inventory?

Explanation

The inventory level at which the firm places order to replenish inventory is called the reorder point. It depends on-

  • The lead times
  • The usage rates

Under perfect certainty about the usage rate, and instantaneous delivery, reorder point will be equal to:

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