SWW is an independent wholesaler that supplies food to small-scale retailers. At present it owns a cold storage warehouse.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] 1 mark for each feature Temperature controlled / low temperature Refrigerated/freezer compartments Controlled by computers Storage of perishable/seasonal products Large building
2. [2] Up to 2 marks for justified reasoning Yes, as SWW are dealing with perishable goods (1) so goods must be kept in the right temperature (1) the food needs to be fresh or preserve the goods (1) they would be ruined by frost/damp (1) particularly over long periods (1) so would not be saleable (1) and whilst in storage gives SWW time to sell the goods (1) find a market / meet demand (1)
3. [2] No, if SWW is selling food that is in cans/boxes (1) this will preserve the food (1) and that will mean that it does not require refrigeration (1).
4. [3] OFR applies $2760 (3) Method $3680 × 0.25 = $920 (1) $3680 – $920 (1)
5. [4] 1 mark for advantage and 1 mark for explanation 1 mark for disadvantage and 1 mark for explanation Advantages: ∞ Improved sales (1) persuades retailer to buy more goods (1) as they can pay later for the goods (1) ∞ Improved margins (1) SWW adds extra to its prices to cover the trade credit costs (1) OR as a disadvantage: the cost of offering discounts (1) reduces the margin on sales (1) ∞ Improves trading relationship (1) leading to customer loyalty (1) Disadvantages: ∞ Bad debts (1) payment not made by the retailer (1) delay in payment (1) leading to cash flow problems / losses made (1) ∞ More administration needed (1) leading to extra costs (1)
6. [6] Arguments for and against introducing self-service: ∞ Lower wage cost – more customers are served with fewer staff as assistants only need to re-stock shelves / act as cashiers ∞ Better use of space in shop – greater variety of stock to attract more customers / sell more ∞ Better display space – encourages impulse buying so retailer gains more profit from customers buying extra ∞ Better service offered - customers don't have to wait in checkout queue so may be more loyal/return ∞ Sales may increase – customers prefer self-service as they can inspect goods before buying ∞ Loss of customer loyalty and reduced sales – personal customer-retailer relationships could be lost ∞ Cost of implementing self-service – new shelving and new technical equipment scanning items at tills / barcoding Arguments for and against opening longer hours: ∞ More sales as more opportunity to buy – e.g. workers, can visit rather than go to a supermarket which is already likely to open for longer hours ∞ Costs of paying existing staff more money – their working hours would increase, or employing more staff. ∞ Costs of hiring/training new staff - existing staff may not be willing to work extra hours as they have existing commitments which they cannot change Evaluation: If the small-scale retailer can afford the layout changes to implement self-service and it will actually reduce staff costs they should go for the self-service option because it will increase sales for the future. However, if maintaining personal customer relations is more important to the loyalty of their customers then opening for longer might be the more suitable option.