2022 PLMGS 4E5NA POA Prelim Paper 1 - Answers

2022 4E5NA POA Prelim Paper 1 (Answers) 1 (a) Glenys Shoes Pte Ltd’s inventory turnover rate has improved from 21.15 times in 2021 to 27.4 times in 2022 and Didier Solescape Pte Ltd’s inventory turnover rate has also improved from 40.6 times in 2021 to 41.7 times in 2022 which means that both businesses are managing inventory more efficiently over the two years. [1] The inventory turnover rate of Didier Solescape Pte Ltd in 2021 and 2022 are better than that of Glenys Shoes Pte Ltd which indicates that Didier Solescape Pte Ltd is able to turnover its inventory much faster (i.e., sell its inventory faster) than Glenys Shoes Pte Ltd in both years. [1] OR The inventory turnover rate of Didier Solescape Pte Ltd in 2021 and 2022 are better than that of Glenys Shoes Pte Ltd which indicates that Didier Solescape Pte Ltd is managing its inventory more efficiently ((i.e., sell its inventory faster) than Glenys Shoes Pte Ltd in both years. [1] Possible reason for Didier Solescape Pte Ltd’s better inventory turnover rate: - Able to sell inventory faster by reducing selling price for slow-moving goods [1] - Able to sell inventory faster by providing trade discounts to encourage customers to buy in bulk and regularly [1] - Able to sell inventory faster by attracting more customers through marketing campaigns [1] - Able to keep sufficient inventory on hand by using technological tools to improve accuracy of predictions about customer demand in order to know when and how much inventory to buy [1] Possible reason for Glenys Shoes Pte Ltd’s worse inventory turnover rate: - Unable to sell inventory faster by reducing selling price for slow-moving goods [1] - Unable to sell inventory faster by providing trade discounts to encourage customers to buy in bulk and regularly [1] - Unable to sell inventory faster by attracting more customers through marketing campaigns [1] - Unable to keep sufficient inventory on hand by using technological tools to improve accuracy of predictions about customer demand in order to know when and how much inventory to buy [1] Hence, Didier Solescape Pte Ltd is more effective in managing its inventory as compared to Glenys Shoes Pte Ltd. [1] Max 4 marks

3 [Turn over (b) Offer promotional activities with discounts to sell and reduce inventory holdings [1] or Keep sufficient inventory by monitoring inventory level closely and replenish only the required amount of inventory [1] or Sell inventory faster by reducing selling price for slow-moving goods [1] or Sell inventory faster by providing trade discounts to encourage customers to buy in bulk and regularly [1] or Sell inventory faster by attracting more customers through marketing campaigns [1] or Keep sufficient inventory on hand by using technological tools to improve accuracy of predictions about customer demand [1] or Keep sufficient inventory on hand by using technological tools to know when and how much inventory to buy