MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS
2016/2017 ACADEMIC YEAR
FIRST YEAR FIRST SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
DIPLOMA IN BUSINESS MANAGEMEN
COURSE CODE: DBM 009
COURSE TITLE: STORES AND MATERIALSMANAGEMENT
DATE: 27TH APRIL 2017 TIME: 8.30AM-10.30AM
INSTRUCTIONS TO CANDIDATES
• Answer question ONE (compulsory) and any other THREE
• Question one carries 25 marks
• All other questions carry 15 marks
This paper consists of 3 printed pages. Please turn over
QUESTION ONE
a) Describe the advantages and disadvantages of centralized storage
(14marks)
b) The Bin card for material 2400W shows the following
Maximum Stock level 1500units
Minimum stock level 600 units
Reorder quantity 800units
Issue during the year 6000units
Required:
Calculate stocks turnover (6marks)
c) Explain the reasons for holding stocks (5marks)
QUESTION TWO
a) Explain LIFO and FIFO methods of stock valuation with suitable examples
(10 marks)
b) Discuss the EOQ Model (5 Marks)
QUESTION THREE
a) Discuss five reasons for holding stock (10 Marks)
b) List five reasons as to why record management is important (5 Marks)
QUESTION FOUR
a)Items purchased from a supplier costs Kshs 20/= each and the forecast for next year demand is 1000units.If it costs Kshs 5/ every time an order is placed, for more units and the carrying cost is Kshs 4/ per unit per year, what quantity should be ordered each time.
(i)What is the total ordering cost per year (3 marks)
(ii)What is the carrying cost each year (6marks)
(b)Describe three types of inventory (6marks)
QUESTION FIVE
a) Explain the following terms;-
i) Lead time (2 marks)
ii)Demand (2 marks)
iii) Economic order quantity (2 marks)
iv)Safety stock (2 marks)
v) Maximum stock scribe (2 marks)
b) Discuss the economic order quantity (EOQ) (5marks)
