(CN-26) INVENTORY MANAGEMENT, LOGISTICS AND INVESTMENT RECOVERY

Transcription

1 INVBUS2 NOVEMBER 2013 EXAMINATION DATE: 7 NOVEMBER 2013 TIME: 09H00 11H00 TOTAL: 100 MARKS DURATION: 2 HOURS PASS MARK: 40% (CN-26) INVENTORY MANAGEMENT, LOGISTICS AND INVESTMENT RECOVERY THIS EXAMINATION PAPER CONSISTS OF 4 SECTIONS: SECTION A: CONSISTS OF: (i) 10 MULTIPLE-CHOICE QUESTIONS (10 MARKS) (ii) 5 TRUE OR FALSE QUESTIONS (10 MARKS) (iii) 10 MATCHING-STATEMENT QUESTIONS (10 MARKS) SECTION B: SECTION C: SECTION D: CONSISTS OF 3 SHORT QUESTIONS CONSISTS OF 3 LONG ANSWER QUESTIONS CONSISTS OF 3 INTERPRETATIVE QUESTIONS ANSWER ANY ONE OF THE QUESTIONS (10 MARKS) (40 MARKS) (20 MARKS) INSTRUCTIONS: 1. Read the following instructions carefully before answering the paper, as failure to act upon them will result in a loss of marks. 2. Write your answers in your answer book, which is provided in the exam. 3. Ensure that your name and student number are clearly indicated on your answer book. 4. Write your answers in either blue or black ink in your answer book. 5. Read each question very carefully before you answer it and number your answers exactly as the questions are numbered. 6. Begin with the question for which you think you will get the best marks. 7. Note the mark allocations for each question give enough facts to earn the marks allocated. Don't waste time by giving more information than required. 8. You are welcome to use diagrams to illustrate your answers. 9. Please write neatly we cannot mark illegible handwriting. 10. Any student caught cheating will have his or her examination paper and notes confiscated. The College will take disciplinary measures to protect the integrity of these examinations. 11. If there is something wrong with or missing from your exam paper or your answer book, please inform your invigilator immediately. If you do not inform your invigilator about a problem, the College will not be able to rectify it afterwards, and your marks cannot be adjusted to allow for the problem. 12. This paper may be removed from the examination hall after the examination has taken place. DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 1 OF 7

2 SECTION A (30 MARKS) (i) MULTIPLE-CHOICE QUESTIONS Choose the correct option for each of the following. Write only the question number and your chosen answer. For instance, if you think that the correct answer for number 1 is, then write it as Which of the following is not a reason for holding inventory? Inventory is held to give to charity. Inventory is held to give to staff members. Inventory is held to for drought seasons. All of the above. 2. What are the four types of inventories? production, processing, maintenance and finished product inventory raw material, food, maintenance and finished product inventory food, processing, maintenance and finished product inventory production, processing, mechanical and finished product inventory 3. Which one of the following is not a contract method for procuring (buying) inventories? standing orders term orders low value orders operational orders 4. Which of the following is an ordering cost? administration costs bus booking costs medical costs None of the above. 5. What is the formula for the reorder point? R (reorder point) = ð (average usage per year) L (lead time) R (reorder point) = ð (average usage per day) L (lead time) R (render point) = ð (average usage per week) L (load time) R (render point) = ð (average usage per second) L (load time) 6. What does ERP stands for? every retail product ever-ready power enterprise resource planning energy recovery point DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 2 OF 7

3 7. Which of the following is a benefit of an effective returns system? protects the environment reduces liabilities minimises taxes None of the above. 8. Which of the following is not part of the disposal options commonly used in investment recovery? resell remove route recalculate remarket 9. Which of the following is a barrier to successful reverse logistics? No overseer in the reverse logistics process. Forklifts pushing against the barrier. A driver eating while driving. Cheap Mango flights. 10. Which of the following contains methods of counting inventory? LIFO and FIFO cycle counting and periodic counting one, two, three and four ABC counts [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. Motivate all your answers. 1. Promotional stock is the stock that a business keeps to accommodate seasonal harvesting. 2. With independent demand, the demand for various items is related to one another. 3. Absorption costing is based upon segregation of costs into a fixed component and a variable component. 4. The ABC analysis can only be carried out once demand, price and lead times applicable to all inventory items have been determined. 5. LIFO states that stock (inventory) that is acquired earliest is sold first, leaving the stock that was acquired more recently in inventory. [5 2 = 10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 3 OF 7

4 (iii) MATCHING-STATEMENT QUESTIONS Match the statements in Column B to the terms in Column A. Write down the answers only, for example 1.. Column A Column B 1. in-transit inventories first in first out 2. dead stock last in first out 3. LIFO a product-oriented management philosophy that was perfected in Japan in order to eliminate waste 4. objective of MRP has no value to the business 5. investment recovery (e) in the process of being transported to a buyer 6. EOQ (f) this is usually the sum of the total lost profit and any ill-will that is generated by not having stock 7. value carrier (g) a good that is reusable, for example a gas cylinder 8. cycle count (h) inventory is counted continually throughout the year; sometimes each day 9. just in time (i) economic order quantity 10. stock out costs (j) the practice of minimising costs from the disposal of waste (k) address problems of overstocking inventories [10] [30] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 4 OF 7

5 SECTION B: SHORT QUESTIONS (10 MARKS) QUESTION 1 Explain what the term 'inventory' means. [1] QUESTION 2 Define 'cycle' stock and 'speculative' stock. [4] QUESTION 3 How do you calculate the inventory turnover ratio? (1) What does an inventory sales ratio reveal? (4) [5] [10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 5 OF 7

6 SECTION C: LONG ANSWER QUESTIONS (40 MARKS) QUESTION 1 Briefly discuss the three methods of accounting for inventory. (6) Describe four of the most important ways in which the effectiveness of the inventory management system can be measured. (4) [10] QUESTION 2 Define 'reverse logistics'. (2) Identify eight barriers to reverse logistics. (8) [10] QUESTION 3 Outline the symptoms of poor inventory management. (10) Explain the reasons why an organisation will decide to make a part rather than buy it from a supplier. (5) Specify the methods of decreasing inventory-related costs. (5) [20] [40] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 6 OF 7

7 SECTION D: INTERPRETATIVE QUESTIONS (20 MARKS) ANSWER ANY ONE OF THE QUESTIONS QUESTION 1 The inventory holding costs, or carrying costs, are the total costs involved in holding inventory. Name five inventory carrying costs. (5) Briefly explain any three of the inventory carrying costs to the junior assistant. (3 5 = 15) [20] OR QUESTION 2 Discuss the Materials Requirement Planning (MRP) system, using the following headings: Definition (2) Questions answered (3) Components (5) Positive influences (advantages) for the purchasing department (10) [20] QUESTION 3 OR You are asked to explain to a new member of staff why inventory is important. Outline seven of the reasons for holding an inventory. [20] [20] Section A: 30 marks Section B: 10 marks Section C: 40 marks Section D: 20 marks TOTAL: 100 MARKS DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 7 OF 7