Coursework, Finance and Accounting

Coursework, Finance and Accounting
Financial Mathematics and Business Statistics Coursework August 2014

Instructions

This coursework tests your basic financial mathematics and statistical modelling skills, using spreadsheet software (Excel – formulae, financial maths, graphical

features, Data Analysis and Solver tools) as well as your awareness of the reality of how financial products work. Your answers are to be presented in an essay/report

format, for which you will use a word processor. In writing your report, please:

• state and explain all assumptions, on which your answers are based;
• clearly indicate your answer/recommendations
• support any answers with the appropriate calculations to arrive at the answer

• include selected printouts of formulae underlying computed values. Despite the fact that you will be submitting the Excel file as well, your report is a stand-alone

document, meaning a reader should not be required to look at the Excel file to understand your analysis, findings and recommendations

• please note that adequate usage of the excel calculations in the report is important. This means that the key data/findings needs to be included in the report and

appropriate referencing needs to be done, i.e. the relevant cell/table/range in the relevant tab of the excel file mentioned at the point of the report when it should

be consulted.

The report will have a maximum of 10 pages (including any Appendixes; penalties will be applied for longer submissions – you are required to develop your judgement on

what is and isn’t important). Ten percent of the total mark is allowed for quality of the presentation and these marks are distributed among the questions.

Deadline: The coursework is to be submitted on Moodle by 5.00 pm on Friday 15th August 2014. You will need to submit a Word document with the report (see instructions

above) and an Excel file with the calculations.

Notes:

This coursework is your own (individual) work. Any student found guilty of plagiarism will be penalised. Standard penalties for late submissions are applicable.

Carlos Ribeiro 1

Question 1: (10%)

A retailer knows the annual demand for one of its product is 500,000 units, the ordering costs are £40 per order and the average carrying cost per unit is 110 pence.

You are required to:

1. Determine the Economic Order Quantity, the number of orders per year and the reorder period given the data above.

2. Produce sensitivity analysis assuming a change of up to 7.5% up or down on each of the factors individually and on all factors simultaneously.

3. Make a final recommendation to the board of the company, as to the number of units it should include in each order.

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