Supply Management — 2024

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

November 2024

Paper codes: 2903/203
Time: 3 hours
Instructions: Answer any FIVE questions. All questions carry equal marks. Answer the questions in English.

Question 1(a) — 10 marks

Miss Jua, a supply chain officer at Dinko company intends to prepare a materials plan for the company. Outline five types of information that she would include in the plan.

Model answer

  1. Material descriptions, specifications and required quality standards.
  2. Forecast quantities and the dates on which materials will be needed.
  3. Existing stock, outstanding orders and usable balances.
  4. Approved sources, lead times and proposed delivery schedules.
  5. Estimated purchasing, transport, storage and handling costs together with the available budget.

Question 1(b) — 10 marks

Explain five factors that a supply chair officer may consider when forecasting material requirements in an organisation.

Model answer

  1. Production and sales plans: expected output determines the materials needed for operations.
  2. Historical consumption: past usage and seasonal patterns provide a starting point for estimation.
  3. Bills of materials and wastage: component quantities, yield and scrap affect gross requirements.
  4. Inventory position: usable stock and confirmed incoming orders reduce the amount still to be obtained.
  5. Future changes: new products, technology, customer demand and supplier lead times may make past usage an unreliable guide.

Question 2(a) — 10 marks

The management at Pipo company is concerned about the increasing cases of materials damage during the materials handling process. Explain five measures that should be taken to address this problem.

Model answer

  1. Choose suitable equipment: match capacity and handling method to the weight, fragility and shape of materials.
  2. Train operators: correct lifting, stacking and movement techniques reduce avoidable damage.
  3. Maintain equipment: inspect and repair worn forks, wheels and lifting mechanisms before they fail.
  4. Improve protective packing: use stable unit loads, pallets and cushioning appropriate to the goods.
  5. Control movement and storage: clear routes, safe speeds, load limits and correct stacking prevent collisions and crushing.

Question 2(b) — 10 marks

Outline five ways in which the materials packaging systems may enhance efficiency in the supply chain management function in an organisation.

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 3(a) — 10 marks

Outline five roles that the supply management function may be expected to play in a manufacturing firm.

Model answer

  1. Plan and obtain the materials required by production.
  2. Select, evaluate and develop suitable suppliers.
  3. Control stock levels and maintain reliable inventory information.
  4. Coordinate inbound transport, storage and materials handling.
  5. Manage purchasing cost, quality, delivery and supplier relationships to support manufacturing objectives.

Question 3(b) — 10 marks

Outline five indicators of efficient storage system in an organisation.

Model answer

  1. High stock-record and location accuracy.
  2. Low rates of damage, theft and deterioration.
  3. Prompt and accurate retrieval and issue of materials.
  4. Good floor and cubic-space utilisation without unsafe congestion.
  5. Low cost per unit stored or handled together with safe working conditions.

Question 4(a) — 10 marks

Outline five types of costs that an organisation may focus its out-bound logistics operations.

Model answer

The supplied wording is retained. The answer identifies the cost categories associated with outbound logistics.

  1. Transport costs: freight, fuel, vehicle operation and distribution-driver costs.
  2. Warehousing costs: rent, utilities and operation of finished-goods storage facilities.
  3. Inventory carrying costs: capital, insurance, deterioration and obsolescence while goods await sale.
  4. Order-processing costs: receiving customer orders, documentation and dispatch administration.
  5. Packaging and handling costs: preparing, loading, unloading and protecting products for delivery.

Question 4(b) — 10 marks

Explain five factors that a manufacturing firm may consider when developing its physical distribution plan.

Model answer

  1. Demand and service requirements: forecast volumes, customer locations and delivery time expectations.
  2. Product characteristics: weight, volume, perishability, value and handling needs determine suitable distribution arrangements.
  3. Transport options: compare mode, route, capacity, reliability and total delivery cost.
  4. Storage and inventory resources: locate warehouses and stock levels so demand can be met economically.
  5. Organisational capacity: align the plan with available funds, staff, systems, equipment and production schedules.

Question 5(a) — 10 marks

There are certain advantages to an organisation of adopting the Enterprise Resource Planning (ERP) system in its operations. Outline five such advantages.

Model answer

  1. A shared database improves the consistency of information across departments.
  2. Integrated workflows reduce duplicate entry and manual reconciliation.
  3. Real-time visibility improves stock, purchasing, production and finance coordination.
  4. Standard controls and audit trails improve accountability.
  5. Consolidated reports support faster planning, monitoring and management decisions.

Question 5(b) — 10 marks

The Government of Kenya recently introduced the standard Gauge Railway Services which has revolutionized the transport industry in the country. Explain five ways in which this development has positively affected the transport industry.

Model answer

This is a conceptual answer to the November 2024 paper. Benefits depend on the route, service arrangements and effective rail-road integration.

  1. Greater freight capacity: rail can move large consignments, reducing dependence on individual road trucks.
  2. Modal choice: shippers gain an additional trunk-haul option that can be combined with road collection and delivery.
  3. Potential road decongestion: transferring suitable freight to rail reduces heavy-vehicle pressure on major road corridors.
  4. Improved journey predictability: scheduled rail services can support more dependable movement on the served corridor.
  5. Logistics development: terminals and rail-road connections encourage investment in freight handling, warehousing and related transport services.

Question 6(a) — 10 marks

Iko company has decided to adopt the inverted-T stores layout system in its ware house. Describe five features of this system.

Model answer

  1. Goods receipt and dispatch are positioned on the same side of the warehouse.
  2. A main central aisle extends into the storage area and links with the front movement area, giving the flow an inverted-T arrangement.
  3. Bulk storage and order-picking areas can occupy different sections beside the main aisle.
  4. Stock can be zoned by movement frequency, with fast-moving items closest to the receipt and dispatch area.
  5. Receiving and issuing share a common front operating zone, allowing coordinated use of bays and handling resources.

Question 6(b) — 10 marks

Explain five advantages of effectively monitoring the performance of the physical distribution system in a retail organisation.

Model answer

  1. Cost control: comparing actual expenditure with targets reveals expensive routes, handling or storage activities.
  2. Better service: tracking timeliness, completeness and damage identifies problems affecting customers.
  3. Improved utilisation: vehicle, warehouse and labour data show where capacity is wasted or overloaded.
  4. Corrective action: early performance warnings allow managers to investigate causes and adjust plans.
  5. Better future decisions: reliable historical results support realistic budgets, targets and distribution-network improvements.

Question 7(a) — 10 marks

Explain five reasons that may influence organisation to mechanise its materials handling system.

Model answer

  1. Higher throughput: machines move large volumes faster than manual methods.
  2. Lower repetitive labour effort: suitable equipment reduces the work needed for routine movement.
  3. Improved safety: properly selected equipment reduces heavy lifting and associated injury risk.
  4. Reduced product damage: controlled handling provides more stable and consistent movement.
  5. Better space use: lifting and movement equipment can support suitable vertical storage and organised unit loads.

Question 7(b) — 10 marks

Electric Vehicles (EVs) are one of the categories of vehicles used in the transport operations. Describe five features of these vehicles.

Model answer

  1. Electric traction motor: propulsion is provided wholly or partly by electric motors rather than only an internal-combustion engine.
  2. Battery energy storage: rechargeable batteries supply electrical energy for traction in battery-electric vehicles.
  3. Charging system: a charging port and power electronics replenish and manage stored energy.
  4. Regenerative braking: part of the vehicle’s kinetic energy is recovered during deceleration.
  5. Quiet, locally emission-free battery-electric operation: there are no exhaust emissions at the vehicle when it runs entirely on electricity, although electricity generation and manufacture still have environmental impacts.
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