MNB1601/201/2/2011 STREPIESKODE BAR CODE

UNISA P248(A)

DEPARTMENT OF BUSINESS MANAGEMENT

BUSINESS MANAGEMENT 1B MNB1601 TUTORIAL LETTER 201/2/2011

UNISA

MNB1601/201

Contents
1 2 3 THE ASSIGNMENTS COMMENTS ON THE ASSIGNMENTS THE EXAMINATION 3.1 ADMISSION TO THE EXAMINATION 3.2 PREPARING FOR THE EXAMINATION 3.3 THE DANGER OF NERVOUSNESS 3.4 WRITING THE EXAMINATION 3.5 HINTS ON COMPLETING THE MARK READING SHEET IN THE EXAMINATION CONCLUDING REMARKS

Dear Student 1 THE ASSIGNMENTS

Some of you sent your answers directly to the Department of Business Management. Please don't do this! We then have no choice but to return them to you unmarked. Mark reading sheets must be sent to the Assignments Section. Other students submitted their answers on a sheet of paper and these were also returned unmarked. You should have submitted your answers on the mark reading sheet. 2 COMMENTS ON THE ASSIGNMENTS

We suggest that you do not write the correct answers on the actual assignment in tutorial letter 101. A very useful method of revision towards the end of the semester is to work through your assignment again. However, if you see the correct answer written there before you have even read the question; your revision will be less effective. It is best to record your own answers separately from the correct answers. The following explanations form the most vital part of the teaching process. Go through the answers now don't wait till just before the examination. Study these comments carefully and compare them with the reasoning in your answers to the questions. Make sure that you understand our reasons for the answers.

ASSIGNMENT 01 QUESTION 1 The correct answer is option 3 (a b d). Productivity, measured as the ratio of output to input, is a yardstick of the efficacy with which operations management transforms the businesss scarce resources into products or services. Higher productivity is directly related to an increase in profitability. Operations management is therefore important to a business, so statement a is correct. The client is an important focal point in operations management. Businesses will therefore try, through their particular operations skills, to satisfy their clients needs better than their competitors. So statement b is also correct.

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Statement d is correct because certain businesses, through their particular operations skills, have built up good reputations concerning high-quality products or services and low costs. These reputations are important in ensuring continuing business success. Operations management is not related to planning in the purchasing function. Statement c is therefore wrong. If your answer was wrong, please refer to section 10.1.1 in the 8 edition of the prescribed book. QUESTION 2 The correct answer is option 4. Inputs comprise resources that are used in the transformation process those that are to be transformed by processing, changing or converting them and those that are required to make the transformation possible. The inputs in this question would be the saw and planing equipment, since these instruments are the resources that are needed to transform the materials to create furniture (output). If your answer was wrong, please refer to section 10.2.2.1 and table 10.2 in the 8 edition of the prescribed book. QUESTION 3 The correct answer is option 3 (a d). Operations management objectives can be arranged in such a way that a business can acquire an operations-based advantage. This involves providing customers or clients with certain benefits compared with those provided by competitors. Therefore, customer/client needs are often referred to as competitive priorities. Statement a is correct. Statement d is correct because it is the duty of all employees in the business to do their best for the business. This involves doing things better, which is the basis of TQM (total quality management). Statement b is wrong because shortening the lead time would amount to doing things fast, which is the desirable state. Statement c is also wrong. High reliability requires the business to meet specifications continuously in the long term, not in the short term. If your answer was wrong, please refer to section 10.1.1 in the 8 edition of the prescribed book. QUESTION 4 The correct answer is option 1. A dentist renders a professional service which represents an operational process provided on a high clientcontact basis, where the client himself or herself is usually present within the service process for a considerable period of time. As already mentioned, dentists provide a service and services are characterised as being intangible and perishable in nature. If your answer was wrong, please refer to section 10.3.2 and table 10.1 in the 8 edition of the prescribed book. QUESTION 5 The correct answer is option 2. Batch operational processes are used when producing products of different varieties, where the production
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thereof occurs in different batches. Here, the variety of products is high and the volume produced is on the medium scale. Therefore, options 3 and 4 are incorrect. Sappi is a manufacturer that produces paper on a large scale. One might therefore think that the correct operational process to use would be the mass process, since paper is produced in high volumes and little variety. However, option 1 is incorrect. In this question, the correct answer is option 2. The continuous operational process is a step beyond mass production because the volumes are even greater and there is even less variety in the type of product. These processes provide the same product (paper) on a continuous basis without a break. If your answer was wrong, please refer to section 10.3.1 and figure 10.4 in the 8 edition of the prescribed book. QUESTION 6 The correct answer is option 4 (a c b e d). The correct order of the steps is implicit in the actual designing of products and services. The first step (idea or concept generation: statement a) begins when different ideas and concepts for new products or services are generated. In the second step (the screening process: statement c), ideas and concepts are evaluated by means of a screening process based on the design criteria of feasibility, acceptability and risk. The third step (the preliminary design: statement b) is the first attempt to specify the composition of the components of the product or service to be included in the package and to identify the processes that will be necessary to produce or provide the product or service package. The aim of the fourth step (evaluation and improvement: statement e) is to evaluate the preliminary design for improving the process of manufacturing and provision and making it cheaper and easier. The fifth step (prototype and final design: statement d) is the development of a prototype of the product or simulation of the service in order to test it in the market. If favourably received in the market, the final design and specifications of the product or service may be compiled. If your answer was wrong, please refer to section 10.4.2.3 in the 8 edition of the prescribed book. QUESTION 7 The correct answer is option 1 (a d). In the fixed-position layout, the process position is fixed. This means that the product cannot be moved because of its size, shape or location. The resources required in the transform ation process (eg equipment and labour) must be taken to the receiver of the processing before processing can occur. Statement a is therefore correct. Statement d is also correct. In the cellular layout, the required processes are placed in a cell and the particular cell is then arranged according to either a process or a product layout. In a process layout, similar processes (or operations) are grouped into sections according to the tasks that must be performed. This grouping is not necessarily in consecutive order of performance. Statement b is thus wrong. Statement c is also wrong. In the product layout, the different processes or operations required to manufacture or provide a specific product or service are arranged in consecutive order. The layout is thus adapted to the product. If your answer was wrong, please refer to section 10.4.3.2 in the 8 edition of the prescribed book.
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5 QUESTION 8 The correct answer is option 3.

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Deloitte and Touche management services (a) and Doctor John Doe (e) provide a professional service (ii) as they have formal qualifications and it is a high client-contact basis service. ABSA banking services (b) and the Sheraton Hotel (c) in Pretoria qualify as a service shop (i). South African Airways (d) provides a largely standardised service to thousands of customers every day, therefore it is a mass service (iii). If your answer was wrong, please refer to section 10.3.2 and figure 10.5 in the 8 edition of the prescribed book. QUESTION 9 The correct answer is option 3. Option 1 is wrong as a level capacity plan is a plan in which the capacity levels are kept constant and demand fluctuations ignored. Option 2 is wrong as a chase-demand plan is a plan in which the capacity levels are adjusted according to fluctuations in demand. Option 3 is correct as a demand-management plan is a plan in which demand as such is adjusted to tie in with available capacity. Hotels use this capacity plan as the demand is different in different seasons and periods of the year. Option 4 is wrong as it is not an example of a capacity plan. If your answer was wrong, please refer to section 10.5.2.2 in the 8 edition of the prescribed book. QUESTION 10 The correct answer is option 4 (a b c d). This means that all the failures enumerated in the question are typical failures occurring in operations processes. If your answer was wrong, please refer to section 10.6.2.1 in the 8 edition of the prescribed book. QUESTION 11 The correct answer is option 4 (a b c d). In the preliminary selection, the HR manager should learn the following about the applicant: Does the applicant comply with the minimum requirements as given in the job specification? What type of jobs did the applicant hold in the past? How quickly did he or she progress? How often has he or she changed jobs? Therefore all the statements are correct as they are all questions which the HR manager should ask applicants during the preliminary screening phase of the selection process. If your answer was wrong, please refer to section11.4.2.1 in the 8 edition the prescribed book.
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6 QUESTION 12 The correct answer is option 4.

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Placing an advertisement in the local newspaper (recruitment through advertisements) is a means of recruitment whereby the right applicants are drawn and invited to apply for the position as advertised. Option 1 is incorrect. Visiting schools and universities to find prospective applicants is considered to be a sundry recruiting strategy. Option 2 is incorrect. Placing an advertisement on the internet falls under the section of recruitment through radio, TV and the internet, which is very similar and often the same as recruitment through advertisements. Option 3 is incorrect. Offering a job to someone whom the management of KZB knows personally is recruitment through personal approach. This approach is often called head-hunting. Therefore option 4 is correct. If your answer was wrong, please refer to section 11.4.1.4 in the 8 edition of the prescribed book. QUESTION 13 The correct answer is option 1 (a b). The reasons why Tommy will appoint someone internally is that such a person is already familiar with the business (a) and his or her career can be advanced (b). One of the main reasons why employers are often not able to appoint people internally is that current employees are not suitably qualified (c). Neither do current employees bring new ideas to the business because they get used to the way things are done and tend to stagnate (d). People appointed from outside bring their knowledge and experience into the organisation. If your answer was wrong, please refer to section 11.4.1.1 in the 8 edition of the prescribed book. QUESTION 14 The correct answer is option 4. Once Mary has done the preliminary screening of applicants, she has to do intensive selection which is the second of the three phases in a typical selection process for senior management positions. This phase of the selection process involves two steps: psychological testing (the tests usually involve the measurement of the applicants personality, abilities and management skills) and diagnostic interviewing (which is used to obtain information that was not highlighted in the tests or on the application form). If your answer was wrong, please refer to section 11.4.2.2 in the 8 edition of the prescribed book. QUESTION 15 The correct answer is option 2. Performance criteria should meet certain requirements, such as being specific, measurable, accountable, realistic and timely. In addition, they should also be accepted by managers and employees as performance criteria and should allow management to distinguish between good and poor performers. With regard to friendliness as a performance criterion for a receptionists job, it is relevant (1), it is acceptable as a performance criterion (3) and it will allow management to distinguish between good and poor performers (4). It is not, however, possible to measure friendliness and it is therefore a very subjective measurement for evaluating a receptionists performance. The receptionist can thus object to the use of friendliness as a performance criterion because it is not measurable (2).
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If your answer was wrong, please refer to section 11.5.4 in the 8 edition of the prescribed book. QUESTION 16 The correct answer is option 3 (a d). The process of induction is also known as orientation or socialisation. It is a process that a new employee should go through in order to start to work productively as soon as possible. Introducing new employees to their colleagues, and facilitating and expediting the socialising process, is part of the induction process. Statement a is correct. Psychological testing and diagnostic interviews are both steps of intensive assessment and not of induction. Statements b and c are incorrect. In an induction programme, the businesss policy, procedures and rules are explained to new employees so that they are aware of the environment in which they will work. Statement d is correct. The activities that Mr Hetisani performs in statements a and d are true regarding an induction programme. Therefore option 3 is correct. If your answer was wrong, please refer to section 11.4.2.4 in the 8 edition of the prescribed book. QUESTION 17 The correct answer is 1. In human resources planning, demand is affected by business objectives since these objectives determine the number of people who are needed to attain them; supply is affected by the human resources. Therefore, forecasts of the quantity and quality of the employees who are needed by a business in the future have to be made on a regular basis. The main purpose of human-resources forecasting is to balance human-resources supply and demand. Therefore, option 1 is correct. If your answer was wrong, please refer to section 11.3.4 in the 8 edition of the prescribed book. QUESTION 18 The correct answer is option 3. An internal comparison is the second step in deciding on compensation. With internal comparison, the value of jobs has to be compared with each other in terms of the demands they make on the employee. Therefore, the statement in option 3 is correct. Options 1, 2 and 4 are all examples of an external comparison. If your answer was wrong, please refer to section 11.6.3 in the 8 edition of the prescribed book. QUESTION 19 The correct answer is option 3. Jobs can be redesigned to make them more challenging by using job rotation, job enlargement and job enrichment. Job rotation allows employees to move through a variety of jobs, functions or departments (eg working as a cashier, debtors clerk and creditors clerk). Job enlargement focuses on expanding an employees duties and/or responsibilities (eg doing the work of two cashiers or two supervisors as long as he or she is a supervisor).
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Job enrichment allows jobs to become more desirable and challenging by including new and more difficult tasks and granting an employee more accountability (eg acting as supervisor when he or she has not yet been promoted to that level). Please note that being promoted is not a form of job enrichment. When a person is promoted, it means that the lower-level job is vacated and the promoted person moves to a higher-level job. It therefore does not change the job, which is what job redesign is about. If your answer was wrong, please refer to section 11.7.3 in the 8 edition of the prescribed book. QUESTION 20 The correct answer is option 4 (a d). Statement a is correct. The crux of Maslows theory is that needs are arranged in a hierarchy where the lowest-level needs are physiological needs and highest-level needs are self-actualisation needs. Statement b is incorrect. The theory focuses on five needs that explain motivation and not only three needs. Statement c is incorrect. Employees may satisfy their needs outside of the workplace and therefore it is not always the case that highly satisfied employees are always highly productive. Statement d is correct. The theory does assume that a specific need ceases to motivate an employee once it has been satisfied. If your answer was wrong, please refer to section 11.7.2.2 of the 8 edition of the prescribed book.
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ASSIGNMENT 02 QUESTION 1 The correct answer is option 3. Consumers perception determines what they pay attention to and what excites their interest. Consumers hear only those things that they want to hear and see only what captures their interest. It is clear that the advertisement for traditional Indian bridal wear captured Nirvashnis interest, but the advertisement on burial services did not. She therefore excitedly told her mom only about the first advertisement. Nirvashni subconsciously chose to pay attention to the first advertisement concerning the bridal wear and not to the advertisement following it. Nirvashni has therefore shown that perception plays an important role in customer behaviour. If your answer was wrong, please refer to section 12.7.1.1 in the 8 edition of the prescribed book. QUESTION 2 The correct answer is option 2. Rebecca has used geographic (women who live in the Western Cape), demographic (unmarried women between 18 and 25 years of age, income of more than R130 000) and psychographic (liberal) criteria to segment the market. Behavioural segmentation criteria were not used at all. If your answer was wrong, please refer to section 12.8.4 and table 12.2 in the 8 edition of the prescribed book. QUESTION 3 The correct answer is option 4.
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Although it may seem as if the clothing can be classified as a shopping product, this is not the case. The clothing is an upmarket product that is sold through an exclusive distribution channel, which makes it a speciality product. If your answer was wrong, please refer to section 12.11.3/4 in the 8 edition of the prescribed book. QUESTION 4 The correct answer is option 3. Rebecca uses skimming pricing because it is a new range of clothing with prestige value which is sold at a high price. She does not use penetration and bait prices, as these two methods involve setting low prices. Leader pricing is not used either, since this involves special offers, or specials, which Rebecca has not used. If your answer was wrong, please refer to section 12.12.3 in the 8 edition of the prescribed book. QUESTION 5 The correct answer is option 2. Rebecca uses exclusive market coverage because she purposely limits the outlets that distribute her new range of clothing. She has chosen to use only Boutique 4U and Boutique Michelle in the Western Cape to distribute her clothing. If your answer was wrong, please refer to section 12.12.4 in the 8 edition of the prescribed book. QUESTION 6 The correct answer is option 2. A core product can be described in terms of technical and physical qualities. For example, a sports utility vehicle (SUV) has four fitted types, a spare tyre, a 2,4 litre engine and a seating capacity for five people. Therefore, the product concept (a) is matched with the example (ii). A need-satisfying product comprises further need-satisfying utilities, such as guarantees, installation and repair services. For example, the Rav4 has a three year warranty and a motor plan for its first five years. Therefore, the product concept (b) is matched with the example (i). The product image gives the product symbolic value by means of the type of marketing message, price and choice of distribution outlet. For example, Lexus cars are sold only at exclusive dealerships and at a price 30% higher than the Avensis. Therefore, the product concept (c) can be matched with the example (iii). The formal product, in addition to the core product, also includes specific features such as style, quality, brand and packaging. For example, the specific identity of the Mitsubishi Pajero. Therefore, the product concept (d) can be matched with the example (iv). If your answer was wrong, please refer to section 12.11.2 in the 8 edition of the prescribed book. QUESTION 7 The correct answer is option 1. New product development is planned and executed step by step, and the new product idea goes through various phases until the product is eventually introduced into the market. The phases of new product development are as follows: Phase 1: Development of product ideas
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10 Phase 2: Phase 3: Phase 4: Phase 5: Phase 6: Phase 7:

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Screening of product ideas according to financial criteria Elimination of product ideas that do not appear to be viable Physical product development by the production division during which a prototype is manufactured Development of marketing strategy Test marketing in a specific small segment of the market Introduction into the market

The marketing team of Toyota South Africa have already gone through the first three phases, as their idea for the new vehicle has been developed, screened and their unprofitable product ideas have been eliminated. The next step in the new product development process would therefore be to develop a prototype of the new electric two-seater vehicle (phase 4). Therefore option 1 is correct. If your answer was wrong, please refer to section 12.11.9 in the 8 edition of the prescribed book. QUESTION 8 The correct answer is option 3. Since Danny consulted with his friend Susan and recalled her bad experience with her Fiat, one can argue that Danny was gathering information on how best to solve his problem. He was also assured that he made the right choice after seeing all the new advertisements about the features of the Yaris. Therefore option 3 is correct. When Danny became aware of his problem after his car broke down for the third time, the awareness of an unsatisfied need (option 1 phase 2) took place. Option 1 is incorrect in the context of this question. When Danny visited various dealers and then compared all the information that he collected about his options, the evaluation of the possible solutions (option 2 phase 3) took place. Option 2 is incorrect in the context of this question. When Danny decided to purchase the Toyota Yaris, the decision on a course of action (option 4 phase 4) took place. Option 4 is incorrect in the context of this question. If your answer was wrong, please refer to section 12.7.2 in the 8 edition/section 13.6.2 in the 7 edition of the prescribed book. QUESTION 9 The correct answer is option 4. When Danny visits the different car dealers, he is collecting information and consulting external sources to determine the best way to solve his problem. Here Danny is gathering information. When Danny compares all the information (such as the differences in price, quality and performance standards between the VW Polo and the Toyota Yaris) he is evaluating the possible solutions. Therefore option 4 is the correct answer. If your answer was wrong, please refer to section 12.7.2 in the 8 edition of the prescribed book. QUESTION 10 The correct answer is option 4. Advertisements are often directed at people who have already purchased a product in order to reassure them that they have indeed made the right decision. This is phase 5 of the consumer decision-making process. Therefore option 4 is the correct answer. If your answer was wrong, please refer to section 12.7.2 in the 8 edition of the prescribed book.
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11 QUESTION 11 The correct answer is option 3.

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The appropriate discount factors are found in the second table at 10%. The cash flow is then multiplied by the discount factor and added together to get the present value of the cash flows. Calculation: Cash flow 1: R3 000 x 0,9091 = R2 727,30 Cash flow 2: R2 000 x 0,8264 = R1 652,80 Cash flow 3: R5 000 x 0,7513 = R3 756,50 R8 136,60 If your answer was wrong, please refer to section 13.6.3/13.6.3.2 in the 8 edition of the prescribed book. QUESTION 12 The correct answer is option 2. You are asked to calculate the after-tax cost of debt. In the study guide (at the top of page 109) it indicates that in order to get the real cost/after-tax cost of debt, the following calculation must be used. After-tax cost of debt = Interest rate x (1 tax rate) Where Interest rate = 11% Tax rate = 40% Therefore, After-tax cost of debt = 11% x (1 - 0.40) = 11% x 0.60 = 11% x 0.60 = 6.6% If your answer was wrong, please refer to section 9.3 (pages 108 109) in the study guide. QUESTION 13 The correct answer is option 1. The weighted average cost of capital (WACC) is calculated by multiplying the specific after-tax costs (15%, 10%, 7%) of each form of capital (ie owners equity, preference shares and long-term debt) by its weight or proportion in the businesss total financing, and add up the weighted values. You will see that the weights are not given, so you must first calculate them. The WACC of Samsung Ltd can be calculated as follows: Calculate the after-tax cost of each individual form of capital Owners equity: R500 000 Preference share capital: R200 000 Long-term debt: R400 000 Total: R1100 000 Therefore, the proportion of: owners equity is 500 000/ 1 100 000 = 0.45 preference share capital is 200 000/1 100 000 = 0.18
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12 long-term capital is 400 000/1 100 000 = 0.36

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The component cost of capital is as follows: Owners equity: 15% (given) Preference share capital: 10% (given) Long-term debt: 7% (given) Weighted cost for each individual form of capital is calculated as follows: Owners equity: Preference share capital: Long-term debt: Total: 0.45 x 15% = 6.75 0.18 x 10% = 1.8 0.36 x 7% = 2.52 =11.07%

The above calculation is better presented in the table below: Type of capital Owners equity Preference share capital Long-term debt Amount R500 000 R200 000 Proportion 0.45 0.18 Component cost 15% 10% Weighted cost 6.75 1.80

R400 000 R1 100 000

0.36 1.00

7% WACC

2.52 11.07

NB: The cost of owners equity and preference shares must be used as before tax, but the cost of debt must always be used as after tax. If your answer was wrong, please refer to section 9.3 in the study guide and section 13.12 in the 8 edition of the prescribed book. QUESTION 14 The correct answer is option 3. The breakeven units can be calculated by substituting variables in the following formula: N = F SP V R150 000 / (R450 R250) 750 units
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If your answer was wrong, please refer to section 13.5 in the 8 edition of the prescribed book. QUESTION 15 The correct answer is option 2. The profit that K-ZEE Ltd will make if they sell 1 000 jerseys, is calculated by means of the following formula: P = (N x SP) [(N x V) + F] Where P = profit

13 N SP V FC = number of units sold: 1000 units = Sales price: R450 per unit = variable cost: R250 per unit = total fixed cost: R100 000 per annum

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Substitute the above formula as follows: Profit = Profit = (1 000 x R450) [(1 000 x R250) + 150 000] R50 000
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If your answer was wrong, please refer to section 13.5 in the 8 edition of the prescribed book. QUESTION 16 The correct answer is option 2. The favourable difference between the current assets and the current liabilities represents the net working capital. Therefore, Net working capital = Current assets Current liabilities = (123 800 + 746 200 + 250 000) 747 700 = R372 300 If your answer was wrong, please refer to section 13.3.1 in the 8 edition of the prescribed book. QUESTION 17 The correct answer is option 3. The current ratio reflects the relationship between current assets and current liabilities. Calculation: Current ratio = Current assets/Current liabilities = 1 120 000/ 747 700 = 1,50:1 If your answer was wrong, please refer to section 13.7.1.5 in the 8 edition of the prescribed book. QUESTION 18 The correct answer is option 2. Because inventory cannot always be readily converted to cash, it is necessary to evaluate liquidity by also using the acid test ratio. Calculation: The asset-test ratio = Current assets Inventory/Current liabilities = 1 120 000 250 000/747 700 = 1,16 If your answer was wrong, please refer to section 13.7.1.5 in the 8 edition of the prescribed book. QUESTION 19 The correct answer is option 4.
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Total fixed cost is constant, irrespective of the volume produced. Total cost of a business comprises a fixed and a variable cost component. If your answer was wrong, please refer to section 13.3.4 in the 8 edition of the prescribed book. QUESTION 20 The correct answer is option 2. This is indicated on the graph, where (a) crosses the y-axis (cost) at R300. If your answer was wrong, please refer to section 13.3.4 in the 8 edition of the prescribed book. QUESTION 21 The correct answer is option 4 (a c d). Supply chains are a series of linked suppliers and customers. A supply chain links all the organisations, from the raw materials stage (through all the stages of transformation) to the delivery of the final product to the end-user (customer). A supply chain cooperates in networks with mutual long-term agreements to deliver the final product to the final customer in the most effective way and at the lowest cost. If your answer was wrong, please refer to section 14.1 in the 8 edition of the prescribed book. QUESTION 22 The correct answer is option 3. Statements 1, 2 and 4 are wrong. Because the target market is not price-sensitive but quality-conscious, the quality of the raw materials is more important than the price. Quality final products require quality raw materials. If your answer was wrong, please refer to section 14.4.2.1 in the 8 edition of the prescribed book. QUESTION 23 The correct answer is option 4. Statement 1 is wrong. The cyclical system is time-based and review times are regular. This system is used mainly for seasonal products or irregular production. Statement 2 is wrong. JIT is not really an inventory control method. It is a production scheduling system. According to the production schedule, the JIT system informs the suppliers to deliver the right quality materials at the right time, in the right quantity and at the right place. The aim of JIT is zero inventory holding. Statement 3 is wrong. Efficient consumer response was developed for the grocery industry. The ECR system is triggered by real sales figures of the retail outlet. The manufacturer provides products and services in accordance with sales information received from the retailer. Statement 4 is correct because this system focuses only on a specific item, for example sugar. Inventory is ordered when the inventory level reaches a certain point. The same quantity (economic order quantity) will be ordered every time. If your answer was wrong, please refer to section 14.4.3.3 in the 8 edition of the prescribed book. QUESTION 24 The correct answer is option 1.
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Inventory-carrying costs are all those costs involved in holding the inventory, for example insurance. Statement 2 is wrong. Administrative costs include costs such as stationery and telephone costs and the salaries of administrative personnel. They cannot be linked directly with inventory holding. Statement 3 is wrong. Inventory-ordering cost is cost involved in placing an order, for example telephone costs and the salaries of purchasing personnel. Statement 4 is wrong. Inventory-ordering shortage costs are, for example, costs of lost sales and unproductive equipment. If your answer was wrong, please refer to section 14.4.3.2 in the 8 edition of the prescribed book. QUESTION 25 The correct answer is option 2 (b d c a). After studying the relevant sections, it should be clear that option 2 is the correct answer. The steps in the process are as follows: 1 2 3 4 5 6 7 8 9 the development and description of a need choice of suppliers research on prices and availability (determining prices) placing an order or concluding a contract expediting and follow-up receipt, inspection and distribution handling errors and discrepancies paying for the order closing of the order
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If your answer was wrong, please refer to section 14.4.1 and figure 14.6 in the 8 edition of the prescribed book. QUESTION 26 The correct answer is option 1. On a tactical level, management is involved in planning the medium-term needs of the business. The duties include: budgeting the purchasing and supply system methods negotiation developing other functions and suppliers contracting and employing cost-reduction techniques human-resources development interface development

Therefore, option 1 is correct. Setting up supplier alliances, long-term planning and policy formulation are duties that are performed on a strategic level, while expediting, pricing, returns and recycling are duties that take place on an operational level. Therefore, Peter will not be required to fulfill these duties which makes options 2, 3 and 4 incorrect. If your answer is wrong, please refer to section 14.3.1 in the 8 edition of the prescribed book. QUESTION 27 The correct answer is option 3.
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In the context of this question, Telkom uses a combination of a centralised structure and a decentralised structure, where some materials and services are bought on a centralised basis and other materials are bought on a decentralised basis. Telkom uses a centralised purchasing structure when its head office negotiates large contracts with suppliers to supply the copper cable for the telecommunications company (indicating standardisation, which is an advantage of a centralised structure). Telkoms regional offices are able to buy their non-strategic items (such as tools) from local suppliers, thereby indicating the use of a decentralised structure. If your answer is wrong, please refer to section 14.3.2.1 in the 8 edition of the prescribed book. QUESTION 28 The correct answer is option 1 (a c). There are many disadvantages in keeping too little inventory. These include higher unit prices as a result of small orders (option a) and more urgent orders with concomitant higher order and transport costs, and strained relations with suppliers (option c). Option b is a disadvantage of too much inventory. If your answer is wrong, please refer to table 14.2 in the 8 edition of the prescribed book. QUESTION 29 The correct answer is option 3. Dairy Belle Cheese and Butter uses the just-in-time system, therefore timing will be important to them. JIT is about receiving parts or raw materials of the right quality from suppliers at the right time, in the right quantity and at the right place. If your answer was wrong, please refer to section 14.4.3.3 in the 8 edition of the prescribed book. QUESTION 30 The correct answer is option 4. The development and description of a need are required in the purchasing cycle because of the activities of other functional-management areas, such as marketing and operations, where there is a need for materials and services. The needs are conveyed by means of a requisition. Therefore (a) is matched with (ii). Issuing the order is important since it indicates to the supplier the needs of the business by providing the specifications (in respect of quantities, quality, prices, discounts, delivery dates, etc) and the reason for the purchasing transaction. Therefore (b) is matched with (iii). Paying for the order is the task that can be fulfilled only once authorisation for payment has been prepared. Before the payment is authorised, the purchasing and supply function has to check the delivery note, the inspection report, the invoice and the order to confirm the specifications and to verify the calculations (proof of receipt of the materials). Therefore (c) is matched with (iv). The order is often closed when the supplier receives payment. A cheque is a means of payment that can be used. Therefore (d) is matched with (i). If your answer was wrong, please refer to section 14.4 and figure 14.6 in the 8 edition of the prescribed book.
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17 3 THE EXAMINATION

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3.1

Admission to the examination

Make sure that you have the correct date, time and venue. It has happened in the past that students have arrived at the wrong venue, or at the wrong time, or even on the wrong day. We urge you all to do your revision work regularly. Do not slacken off now that the assignments are behind you. And remember, high marks in the assignment do not guarantee high marks in the examination, since you do not have an open book before you. 3.2 Preparing for the examination

The examination will consist of 70 multiple-choice questions. There will be no essay questions. NB: Study all the chapters prescribed for this module (chapters 1014 in the 8 edition) in conjunction with all the study units in the study guide. The questions will be similar to those in the assignments. Please note that fake old examination papers are in circulation among students. Please be aware of the risk of placing too much value on such papers. 3.2.1 Additional revision tools - MCQ revision booklet An exam revision booklet is now available to Business Management I students. The details are as follows: Rudansky-Kloppers, S & Strydom, JW (eds). 2010. Multiple choice questions for Introduction to Business Management. Cape Town: Oxford. ISBN: 9780199050406 It is not compulsory that you purchase this book since it is not prescribed; however, it is good exercise over and above your official study material and can come in handy when you revise for the examination. The book should be available at your nearest academic bookstore. - Self-assessment questions on myUnisa Another good tool to use for revision purposes is the self-assessment exercises (in the form of multiple-choice questions) that have been uploaded on myUnisa. 3.3 The danger of nervousness
th

The closer you get to the actual examination, the more nervous you may feel. This may be detrimental to your state of mind in the examination. Once you have done your preparation, there is nothing more to worry about. You may be uncertain about the answers to some of the questions. When you come across such questions, pass them by and return to them later. 3.4 Writing the examination

All the examination details (date, time and venue) will be sent to you by the Examinations Department. Make absolutely sure that you know where you will be writing the examination. You must be seated in the examination room 15 minutes before the examination starts. The Examinations Department will notify you of your examination results, you are requested not to contact the lecturers in this regard. so

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3.5

Hints on completing the mark reading sheet in the examination

It is essential to complete the mark reading sheet correctly. Although provision has been made for 140 answers on the mark reading sheet, you need to complete only the first 70 answers. DON'T MAKE ANY OTHER MARKS ON THE MARK READING SHEET. In the examination you will use a similar mark reading sheet to the one in the assignment. Common errors often made by students on mark reading sheets are forgetting to fill in student number and/or the unique number of the examination paper using a pen to fill in the spaces filling in two answers on the same line drawing the line too lightly (you are required to use an HB pencil for this purpose) erasing lines in such a way that blotches are left (we require the use of an HB pencil because it rubs out cleanly)

CONCLUDING REMARKS

We wish you everything of the best for the examination. Kind regards Mr A Phenya (specialist in Financial Management) Ms P Prinsloo Ms N Lenhard Prof S Rudansky-Kloppers (012) 429-4493 (012) 429 3103 (012) 429-4935 (012) 429-4689

DEPARTMENT OF BUSINESS MANAGEMENT UNISA

UNISA