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Inventory Management (Pscm 331) Question Paper

Inventory Management (Pscm 331)

Course:Accounting, Finance& Investments

Institution: Kenya Methodist University question papers

Exam Year:2013

TIME: 2 HOURS
Instructions:
Answer question one and any other two.
Question One
Retailers warehouse (RW) is an independent supplier of household items to department stores. RW attempts to stock enough items for a 98% service probability.
A stainless steel knife set is one item it stocks. Demand (2400 sets per year) is relatively stable over the entire. Whenever new stock is ordered, a buyer must assure that numbers are correct for stock on hand and then phone in a new order. The total cost involved to place an order is about Sh.5. RW for figures that holding inventory in stock and paying for interest on borrowed capital, insurance and so on, add up to about Sh. 4 holding cost per unit per year. Analysis of the past data shows that the standard deviation of demand from retailers is about 4 units per day for a 365 days year. Lead time to get the order is 7 days.
Calculate the EOQ
(7 marks)
Calculate the re-order point.
(5 marks)

Briefly outline the four main types of coding systems.
(12 marks)
Outline three purposes of maintaining inventory.
(6 marks)

Question Two
With reference to health and safety, what areas do safety offices examine in order to maintain standards and storage of inventory?
(12 marks)
Define what the following costs are:
Acquisition costs
Holding costs
Shortage costs
Set-up costs
(8 marks)

Question Three
Briefly discuss the following systems:
ABC system of inventory planning and
The push/pull system in warehousing.
(20 marks)

Question Four
Various organizations, depending on demand from customers and margins will employ different kinds of inventory systems. Which inventory system would the following organizations employ?
A grocery store
A manufacturing company
A school’s supply store
A clothing retail chain e.g. deacons
(20 marks)

Question Five
Explain the following methods of inventory accounting
LIFO
FIFO
Weighted Average.
(10 marks)
Differentiate between periodic and perpetual inventory.
(10 marks)

Inventory Management (Pscm 331) Question Paper

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