Question 2
- Explain the following terms:
- Bonded warehouse;
- Mark-down pricing;
- Re-order level;
- Stock-taking.
- State three functions of ABC Stores to Kokoview Ltd
- State three functions of retailer of the TV set
Observation
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Some of the candidates who attempted the (a) part of the question had difficulty listing correctly the features of a bond.
(a) Explanation of terms
- Bonded warehouse: This is a warehouse where goods are kept until custom duty is paid on them.
- Mark-down pricing: It is a deliberate reduction in the selling price of goods and services in order to increase sales.
- Re-order level: This is the level at which order for replacement or replenishment of stock must be placed. It is above the minimum stock level.
- Stocktaking: It is the physical counting of all items held in the store against stock records. This exercise can be done periodically or perpetually.
(b) (i) Functions of ABC Stores to Kokoview Ltd- It provides warehousing facility for the product;
- It advertises the product on behalf of the company;
- It finances the company through advanced payments;
- It provides market information about the product;
- It carries out market research on behalf of the company;
- It ensures price stability for the manufacturer’s product;
- It provides transportation facilities for the product;
- It bears the risk of losses and damages on the product during distribution;
- It buys in bulk from the manufacturer.
(ii) Retailers of the TV sets
- It breaks bulk and sell in small units to the retailer;
- It allows retailer to buy on credit;
- It provides variety of goods;
- It renders after sale services to the retailer;
- It provides technical information about the product;
- It provides delivery services to the retailer;
- It provides advice to the retailer.