Observation

Majority of the candidates attempted this question and the performance was fair. However, some candidates had difficulty in explaining the advantages of inventory control and the types of inventory. Some of the suggested answers are:

(b) Advantages of inventory control

(i) It ensures that just the right amount of stock is available. If there is too much stock, it ties down the company’s capital;

(ii) It saves a lot of staff time. Cost may be cut by reducing the number of staff needed in the business and thereby increasing profit;

(iii) It helps to lower the storage costs;

(iv) It ensures the stock issue at current sequence i.e. FIFO and correct stock levels of the various items are maintained;

(v) It helps to make orders and re-orders at good/appropriate times;

(vi) It helps to reduce losses occurring as a result of theft, pilferage, damage or poor storage;

(vii) Continuous training is required and thereby promotes the efficiency of store staff in the use of stock control systems.

(c) Types of inventory

(i) Raw materials and components - These are items kept for the production of goods or manufacturing of products;

(ii) Finished foods - These are items that are produced or manufactured and kept in store in anticipation for sales;

(iii) Work-in-progress - These are partly finished goods or items kept in the store for further production or manufacturing process;

(iv) Consumables - These are items kept in the store for use by the business in administrative and day to day running of the organization.