Purchasing and Financing 2024

CLASS ASSIGNMENT:
A handcraft shop in a tourist area offers a wide range of articles. To keep an overview of
stock, the owner has decided to buy new stock twice a month. He makes sure that he
always has sufficient stock, but at the same time he wants to avoid overstocking, as he
knows that holding stock costs money.
In the following table you will find the stock card of this shop. Please carry out an ABC
analysis and give him advice.
ARTICLE Purchasing Starting Stock Purchase 1 Purchase 2 End Stock:
Price
Giraffe R220-00 10 - - 1
Zulu masks R120-00 3 15 4 4
Stone sculpture 1 R 30-00 35 20 25 40
Stone sculpture 2 R 18-00 100 85 75 35
Ndebele doll R 9-00 150 120 10 160
Leather Sandals R30-00 35 70 60 10
Hint:
You need to calculate the Turnover Quantity First
Quantity = Starting Stock + Purchases – End Stock
ARTICLE
Value of
Purchase
A-Type
% Value
B-Type
% Value
C-Type
% Value
Giraffe
Zulu masks
Stone sculpture 1
Stone sculpture 2
Ndebele dolls
Leather sandals
Total
Hint:
You are not done with the question! Remember that you still have to advice him.
Advice:
Keep the following general rules in mind when dispensing advice:
“A” goods should be purchased depending on demand (measured by future demand) at
short intervals to reduce capital and interest costs.
“C” goods should be purchased depending on demand (measured by past demand) at
longer intervals to avoid excessive work and to reduce order costs.
“B” goods may be purchased in either of the two ways.
6. JUST IN TIME PURCHASING
Businesses will always try to maintain enough inventory to prevent running out of stock or
to keep production lines moving. There's no greater disaster in a factory than to have a
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