Supply Management — Undated papers

KNEC Diploma in Supply Chain Management, Module II. Original theory examination questions with explained model answers for revision.

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Question 1(a) — 10 marks

Highlight five benefits that an organization may derive from outsourcing its logistics function.

Model answer

  1. Access to specialist logistics skills and technology.
  2. Lower cost through the provider’s consolidated loads and shared facilities.
  3. Wider geographic coverage and established delivery networks.
  4. Flexible capacity to respond to changing distribution volumes.
  5. More management attention available for the organisation’s core activities.

Question 1(b) — 10 marks

Explain the internal challenges that a supply chain manager may face during inventory planning process.

Model answer

  1. Inaccurate demand information: weak forecasts lead to unsuitable stock targets.
  2. Poor inventory records: unrecorded receipts and issues distort available balances.
  3. Limited funds and storage: resource constraints prevent the desired replenishment plan.
  4. Conflicting departmental priorities: production, sales and finance may pursue incompatible stock targets.
  5. Inadequate skills and systems: staff may be unable to analyse requirements or update controls promptly.

Question 2(a) — 8 marks

Highlight four limitations that an organization may face when planning for production in supply management.

Model answer

  1. Uncertain or inaccurate demand forecasts.
  2. Limited production capacity, equipment or skilled labour.
  3. Unreliable availability and lead times of required materials.
  4. Financial constraints that limit purchases, maintenance or additional capacity.

Question 2(b) — 12 marks

Explain six factors to be considered when determining the stock holding levels in an organization.

Model answer

  1. Demand rate: expected consumption determines normal working stock.
  2. Demand variability: unpredictable usage may require more safety stock for a chosen service level.
  3. Replenishment lead time: longer or less reliable lead times increase stock needed before the next receipt.
  4. Holding and shortage costs: managers balance tied-up capital and storage cost against disruption and lost sales.
  5. Product characteristics: perishability, obsolescence, bulk and value constrain sensible holdings.
  6. Supply and operating constraints: minimum orders, delivery frequency, storage capacity and available funds affect feasible stock levels.

Question 3(a) — 10 marks

Highlight the disadvantages of using water as a mode of transport to an organization.

Model answer

  1. Slow transit compared with air and many road services.
  2. Limited access because collection and final delivery usually require another mode.
  3. Exposure to weather, port congestion and sailing-schedule disruption.
  4. Additional terminal, handling and transfer arrangements.
  5. Longer transit may require more inventory and increase exposure to damage or deterioration.

Question 3(b) — 10 marks

Explain the objectives of the warehousing function in an organization.

Model answer

  1. Availability: hold goods so users and customers can obtain them when required.
  2. Protection: preserve goods against damage, theft and deterioration.
  3. Efficient movement: receive, locate, pick and dispatch stock accurately and promptly.
  4. Cost control: use space, labour and handling resources economically.
  5. Accountability: maintain reliable stock records and evidence of authorised receipts and issues.

Question 4(a) — 10 marks

Mr. Kizito, the distribution manager of Baraka Manufacturing Limited has been facing challenges when planning for distribution. Highlight five such challenges.

Model answer

  1. Unreliable demand data: inaccurate forecasts produce inappropriate capacity and stock plans.
  2. Resource shortages: limited funds, vehicles, facilities or staff restrict feasible service levels.
  3. Poor coordination: conflicting production, sales and logistics information disrupts planning.
  4. External uncertainty: traffic, weather, infrastructure failures and market changes upset assumptions.
  5. Weak information systems: limited visibility of orders, inventory and transport performance prevents realistic scheduling.

Question 4(b) — 10 marks

Highlight the material handling activities that a supplies officer may undertake when receiving a consignment from a supplier.

Model answer

  1. Prepare the receiving space and suitable unloading equipment.
  2. Unload the consignment safely.
  3. Move goods to the receiving and inspection area.
  4. Sort, count and arrange items into suitable handling units.
  5. Transfer accepted goods to the correct storage locations and isolate damaged or rejected items.

Question 5(a) — 10 marks

Sema Limited has been experiencing inefficiencies in transport section. Highlight five likely internal causes of such inefficiencies.

Model answer

  1. Poor route and delivery scheduling.
  2. Inadequate preventive maintenance and unreliable vehicles.
  3. Insufficient driver training or weak supervision.
  4. Low vehicle utilisation and excessive empty running.
  5. Inaccurate transport records, weak tracking and poor coordination with dispatch.

Question 5(b) — 10 marks

Highlight five reasons that make it important for an organization to have a good store layout.

Model answer

  1. Reduces unnecessary movement and handling time.
  2. Improves safe use of floor and cubic storage space.
  3. Makes stock identification, access and retrieval easier.
  4. Reduces accidents, congestion and product damage.
  5. Improves supervision, security and stock control.

Question 6(a) — 10 marks

Explain the ways in which packaging of goods may add value to the operations of an organization.

Model answer

  1. Protect goods against damage, contamination and deterioration.
  2. Form convenient units that are easier to lift, count, store and transport.
  3. Provide identification, handling instructions and traceability information.
  4. Improve vehicle and warehouse space utilisation through suitable shapes and sizes.
  5. Reduce losses, handling time and customer complaints when packaging matches the product and distribution conditions.

Question 6(b) — 10 marks

Explain five measures that an organization may put in place to ensure effective use of its material handling equipment.

Model answer

  1. Select and allocate equipment suited to the loads and routes.
  2. Train and authorise operators in safe use.
  3. Carry out planned inspection and maintenance.
  4. Schedule equipment to avoid idle time, congestion and overloading.
  5. Monitor utilisation, damage, breakdowns and operating costs and correct recurring problems.

Question 7(a) — 10 marks

The supply manager at Tuko Limited has engaged in poor inventory management practices for sometime. Highlight the consequences that the organization may face from such a practice.

Model answer

  1. Stockouts: unplanned shortages interrupt production and delay customer orders.
  2. Excess inventory: unnecessary purchases tie up cash and increase holding costs.
  3. Emergency buying: last-minute orders cause expediting and transport premiums.
  4. Poor coordination: procurement, production and finance work from conflicting requirements.
  5. Waste and obsolescence: wrong quantities or specifications lead to unusable, ageing or deteriorated materials.

Question 7(b) — 10 marks

Highlight the benefits that may accrue to an organization that uses pallets for distribution operations.

Model answer

  1. Combines packages into stable unit loads.
  2. Speeds loading and unloading using suitable handling equipment.
  3. Reduces repeated manual handling and associated damage.
  4. Facilitates organised stacking and warehouse storage.
  5. Simplifies counting, movement and control of packaged consignments.
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