Form 2

Business Studies
Revision Questions & Answers

Warehousing
1. State the meaning of the following terms: (4marks)
a. Warehouse: This is a building or a part of a building where goods are received and stored until need
arises for them.
b. Warehouse: This is a building or a room where goods are received and stored awaiting sale or
manufacturing.
c. Warehouses are also know n as depots, a go down or a silo.
d. Warehousing: This is the process of receiving goods into a warehouse, protecting such goods
against all types of hazards and releasing them to users when need arises for them
e. Warehousing: This is the process of receiving goods, storing and dispatching goods in the
warehouse.
f. Warehousing: This is the process of storing goods until the time they are required.
2. List four functions carried out in warehouse (4marks)
 Receiving of goods
 Storing and controlling of goods
 Releasing of goods
 Recording of goods
 Preparing good for sale
 Protection of goods/security
 Holds goods up until custom duty is paid on imported goods
3. Give three distinct stages in warehousing process
i. Receiving goods into a warehouse
ii. Storing them
iii. Releasing them to users
4. Give four reasons that makes warehousing a vital aid to trade (4marks)
 It ensures steady flow of goods
 Ensures stability in prices of goods
 Warehousing ensures continuous production
 Goods stored in warehouses improves in quality
 Warehousing encourages specialization
 Buyers can inspect goods before they can buy them
 Goods stored in warehouses can be prepared for sale
 Ensure that there is no surplus or shortage of goods at the market
 Goods are protected from adverse weather conditions
 Goods are protected from theft and pilferages
5. Name three types of private warehouses
 Wholesalers’ warehouses
 Producers’ warehouses
 Retailer’s warehouses

1|Page
 6. Explain five importance of warehousing to Business (10marks)
 Steady/continuous flow of goods: Producers can produce and store goods awaiting demand through
warehousing e.g. agricultural products that are produced seasonally are made available throughout
the year
 Stability in prices: Warehousing ensures that there is no surplus or shortage of goods. It ensures that
goods are stored when in plenty and released to the market as their need arises. This helps to keep
their prices fairly stable
 Security: Warehousing ensures that goods are protected against physical damage and adverse
weather conditions. This also ensures that the quality of the goods is maintained until they are
demanded. Goods are also protected from loss through pilferage and theft.
 Bridging the time lay/difference between production and consumption: many goods are
produced in anticipation of demand. Such goods must be stored until their demand arises e.g.
gumboots, umbrellas and sports equipment are needed seasonally but are manufactured in advance
and stored in a warehouse so as to be released to the users when need arises for them.
 Continuous/uninterrupted production schedules: Manufactures are able to buy raw materials in
large quantities and store them awaiting their need to arise. This prevents interruption of the
production process because of lack of raw materials
 Preparation of goods for sale: While in the warehouse, goods can be prepared for sale e.g. they can
be blended, packed, graded or sorted out.
 Sale of goods: Goods may be sold while still in the warehouse. If sold while still in a bonded
warehouse, duty passes to the buyer
 Specialisation: Warehousing encourages specialization in production and distribution. Producers
concentrate on producing while distributors store the goods for sale to the customers.
 Unexpected demand can be met: The government collects agricultural goods e.g. cereals and stores
them as buffer stocks to be used in times of disaster or serious shortages.
 Clearance of goods: Warehousing helps in clearance of goods i.e. goods entering the country can be
inspected by the customs officials.
 Warehousing helps to improve the quality of goods e.g. goods like tobacco and wine mature with
time.
 Warehousing enables buyers to inspect the goods before they buy them.
 Wholesale warehouses may also operate as showrooms for traders.
7. Explain any four roles of warehousing in indirect production. (8marks)
 They ensure continuous production/production of goods according to schedule.
 They ensure steady flow of goods to the market.
 They stabilize prices of goods in the market.
 They protect goods from damage and theft as they await to be sold.
 Facilitate production of goods in expectation of demand.
 They make it easier for producers/manufacturers to meet unexpected demand.
 Encourages specialization in production and distribution of goods in readiness for sale.
 Promotes/improves quality of goods stored for sale.

2|Page
 8. Explain five ways in which warehousing facilitates trade. (8marks)
 Steady/continuous flow/supply of goods: Warehousing assists in ensuring a steady flow of goods
into the market
 Stabilization of prices: Warehousing ensures that there is no excess or shortage and this results in
stable prices
 Improve or maintain quality of goods: Warehousing provides storage facilities that maintain/
improves in the quality until they are demanded
 To meet unexpected demand-unexpected demand can be met due to the existence of warehousing
e.g. in time of disaster/calamity
 Inspection of goods: Warehousing enables traders to inspect goods before they buy them
 Clearance of goods (payment of customs/duties)-warehousing facilitates clearance of imported goods
for traders (inspection of goods by the government)
 Storage of goods-warehousing enables the trader to store goods as he looks for the market or due to
mass production or allows continuous production
 Preparation of good: Preparation for sale-goods are blended/packed/graded/sorted/branded while in
the warehouse
 Protection from damage: keeping goods in good condition-warehousing protects goods from
theft/seasonal
9. Explain five ways in which a warehouse may promote trade. (10marks)
 Promote mass production/by allowing the producer to continue producing goods since there is space
for storage of (finished) goods/raw materials
 Stabilizes prices by regulating the flow of goods/storing the surplus/releasing the goods when
demanded.
 Ensures continuity of supply/steady supply of goods/seasonally produced goods by storing them/
releasing to the market/when need arises.
 It facilitates the preparation/processing of goods of sale by branding/ sorting| packaging (accept
relevant method of preparation for sale as expansion.
 Creates time utility by ensuring that consumers get goods when required.
 Ensure safety of goods from physical damage/the damaging effects of weather/pests
 May add value to some goods, e.g. wine/can improve in quality/taste better when they stay for long
time/fetch better prices/better satisfaction of needs
 Enables traders to look for market/safe goods while they are still in the warehouse
 Ensure seasonally demanded good are stored until required
 Bonded warehouses help to store goods awaiting clearance by custom authority/allow the imported
to claim the goods/look for money to pay for custom duty/clearance
 Security for goods/since they are protected from theft/pilferage.
10. Highlight four requirements that are needed for a smooth functioning of a warehouse (4marks)
 Appropriate equipment and special facilities eg refrigerators
 Appropriate staff
 Proper recording system
 Proper receiving and issuing procedures
 Adequate space to allow movement in the warehouse
 Proper location of the warehouse
 Security
 Appropriate infrastructure
 Proper building design

3|Page
 11. Outline four factors that a trader would consider in locating a warehouse. (4marks)
 The location should be ideal in terms of accessibility
 Availability of suitable land
 Near the point-of-sale market
 Near adequate security
 Government policy
 Cost of building
 Outline conditions under which a warehouse may be considered to operating efficiently.
12. Explain five essential qualities of a good warehouse (10marks)
 Convenient location to users: The warehouse should be conveniently located / type of warehouse
 Security systems should be in place e.g., cctv alarms, fire extinguishers.
 Specials facilities to cater for special goods: Appropriate equipment e.g. cold rooms
 Compliance with the law/ legal requirements: A warehouse should be operated according to the
requirements of the law
 Adequate space/ Suitable and adequate premises: A warehouse should be spacious enough to
allow easy movement and accommodation of goods and personnel.
 Proper record keeping/ Clear and proper stock control system: There should be a proper
recording system in a warehouse to ensure that all movement of goods is properly monitored.
Operational procedures and guidelines should be in place.
 Good transport system: A warehouse should be linked with a good and appropriate transport
network to facilitate movement of goods in and out of the warehouse.
 Good communication network: A warehouse should have a good communication network to or
system for easy contact with its client’s suppliers.
 Appropriate staff / Qualified and competent staff: Warehouse staff should be well trained and
efficient for proper management and efficient functioning of a warehouse. The warehouse should be
managed by qualified personnel
 Proper building design: A warehouse should be designed in a way that it accommodates the
intended goods. Should have suitable buildings / well designed
13. Highlight four ways through which the efficiency of a warehouse can be improved. (4marks)
 Providing adequate handing equipment for easy handling of goods.
 Employing qualified workers to operate it.
 Providing enough loading and offloading space.
 Providing enough security to ensure safety of people and goods.
 Ensuring it is spacious to accommodate a large volume of goods.
 Ensuring there is efficient infrastructure
14. Explain five ways of improving the efficiency of a warehouse (10marks)
 Ensuring that there is proper adequate handling equipment - to handle goods safely and easily
 Ensuring that the staff is well trained and motivated - so as to enhance their performance
 To ensure that legal requirements are followed to avoid conflict with law enforcers
 Provision of sufficient loading / offloading areas - to avoid congestion and delays
 Ensure there is adequate security - to avoid theft of goods and safety of workers
 Ensure proper use of space - by proper arrangement of goods
 Ensure there is proper system of inventory control to monitor stock movements to avoid theft
 Ensure there is safety equipment / personnel - to take care of pests, fire, water leaks to safeguard
goods from damage.

4|Page
 15. Explain six essentials of a good warehouse. (12marks)
 Ideal location: A warehouse should be located at a suitable place to facilitate receipt and issue of
goods e.g. a manufactures warehouse should be located near his/her factory while a bonded
warehouse should be at a country’s entry point.
 Proper building: A warehouse should have proper buildings which are suitable for different types of
goods to be stored to give adequate protection to the goods for moving the goods in and out of the
warehouse.
 Equipment: A warehouse should be equipped with appropriate facilities for handling goods such as
fork-lifts conveyer belts etc. It should also be well equipped with necessary storage facilities e.g.
provision of refrigerated or cold storage for perishable goods such as meat and fruits.
 Accessibility: A warehouse should be accessible to its users. It should therefore be linked with good
and appropriate transport system to facilitate movement of goods in and out of the warehouse.
 Safety and security: It should have/be fitted with safety equipment or facilities necessary for
protection of goods against damaged caused by such things like water, fire or sunshine as well as for
the protection of the personnel. It should be located in a secure place and well secured. Should be
fitted with safety gadgets such as firefighting equipment’s and first aid kits
 Communication: A warehouse should have a good communication network or system for easy
contact with its clients and suppliers
 Qualified personnel: A warehouse should have well trained and efficient staff/personnel for proper
management and efficient functioning of the warehouse.
 Recording system: There should be a proper recording system in a warehouse to ensure that all
movement of goods is properly monitored. Should have a good recording and handling systems for
the receipts and the release of goods
 A warehouse should be spacious enough to allow easy movement and personnel.
 Should abide by the law that regulates the operations of warehouses
16. Lobo Traders intends to consult a warehouse. Explain five measures that Lobo would take to ensure
smooth functioning of the warehouse. (10marks)
 Ensure that the warehouse is located in a convenient/accessible place
 Ensure that the warehouse is provided with adequate materials handling
equipment/machines/working materials/tools
 Ensure that the warehouse is spacious enough to allow easy movement/accommodation of goods/
personnel
 Lobo should ensure that the warehouse is fitted with safety equipment for the
facility/personnel/goods/ensure necessary precaution is taken
 Ensure that the warehouse has storage facilities for holding different types of goods
 Ensure adequate security for the goods to be stored/against damage of goods/personnel /facility i.e.,
security of the area to ensure goods are not stolen
 Ensure that the warehouse has qualified personnel
 Ensure that there is a proper system of inventory control/good recording system and recording
system for stock
 Ensure that the laid down legal procedures are followed
 Ensure that there are proper buildings/structures appropriate to the type of goods to be stored
 Ensure that there’s efficient transport system/availability of transport to move goods in and out of the
warehouse
 To ensure there is communication system between the warehouse and clients or by way of examples

5|Page
 17. ABC warehouse has been growing but has not been effective for the last three months. State four
possible reasons why it has become ineffective. (4marks)
18. Outline four circumstances that would hinder a warehouse from functioning effectively (4marks)
 If its location is not suitable for client/if it is not accessible to users
 If it cannot store different types of goods
 If it doesn’t have communication network
 If it is not well equipped to handle goods/it lacks appropriate facilities
 If it is not spacious enough to allow easy movement
 If it doesn’t have well trained personnel
 If it doesn’t keep proper records of movement of goods
 If it doesn’t offer necessary protection to goods in it
19. Outline four conditions under which a warehouse may be considered to be operating efficiently.
(4marks)
 There warehouse should be managed by qualified personnel
 Operational procedures and guidelines should be in place
 Security systems should be in place
 Should have suitable buildings
 Appropriate equipment
 Compliance with one law
 Adequate space
 Proper record keeping
 God transport system
 Good communication network
20. Identify four factors that you would consider when determining the effective operation of a
warehouse. (4marks)
 Accessibility
 Trained personnel
 Security
 Cleanliness
 Legal requirements
 Special facilities of registration.
21. Explain six measures that a wholesaler would take to ensure the smooth running of his warehouse.
 It should be spacious enough to accommodate as many goods as possible.
 It should appropriate equipment and facilities that will facilitate quick receipt and movement of the
goods.
 It should have adequate safety facilities to ensure adequate protection of goods against damage of
goods.
 It should be located near good transport network to facilitate faster movement of goods in or out of
the warehouse.
 It should have appropriate staff (skilled) to manage the receipt and recording activities of the
warehouse.
 It should have the necessary special facilities for the storage of goods
 It should have proper recording of activities that take place to ensure adequate monitoring of stock
movements.
 It should conform to the existing government requirements for warehousing.

6|Page
 22. Outline four benefits that may be received by a business that uses its own warehouse (4marks)
 Business maintains continuous supply of goods
 Goods are kept safely e.g., from theft
 It will control the operations of the warehouse
 Warehouse can be tailored to meet its needs or specifications
 It is possible to choose desired location or conveniently located
 Customers are retained as they are sure of getting the goods on demand
 Savings increases for not renting storage facilities
 Goods can be processed in the warehouse
 Space is guaranteed
23. Highlight four prominent features of a private warehouse (4marks)
 Owner does not need a license to operate
 Owned by a wholesaler/retailer
 Exclusively used by the owner
 Managed as a department of the main business
 Usually small in size
 Found near the owner’s premises
 Usually specialized
24. State four prominent features of retailer’s warehouse. (4marks)
 Mainly owned by large scale retailers.
 Stock fast moving consumer goods.
 Attached to the retail shops.
 They hold reserve stock to ensure demand is constantly met.
 Designed to suite owners’ specifications.
 Owners have full control over warehouse operation.
25. State four advantages of private warehouses (4marks)
 The owner has full control over its operation and may make major decisions without having to
consult anyone.
 The warehouse is designed to suit the specific needs of the organizations
 It enables special handling, storage and protection of goods by having special facilities which may
not be available in a public warehouse
 The owner is not tied down by procedures of receiving and issuing goods unlike in public warehouse.
 The owner does not incur the cost of hiring space unlike with a public warehouse
 The operation can be easily automated because the goods to be received stored and dispatched are
already known.
 Warehouses also act as showrooms i.e.; they display their goods in the warehouse.
 These warehouses also enable them to prepare their goods for sale e.g., branding, blending, packing
and sorting may be carried out in the warehouse.
26. State four disadvantages of private warehouses (4marks)
 The initial construction cost of a warehouse is high
 Under-utilization of personnel and facilities may occur especially in times of low volumes
 They may not employ qualified management personnel and are consequently disadvantaged in
dealing with management problem.
 Risks arising from dangers such as fire, pests, theft or damage are not spread

7|Page
 27. State four advantages of warehousing to a retailer (4marks)
 Continuous supply of goods for his customers
 Storing goods whose demand is seasonal
 Goods are stored awaiting collection
 Goods can be prepared for sale through breaking bulk, sorting, packing, and blending
 Protecting gods from physical damage, pilferage and adverse wealth condition
 Relieves retailers of the need to carry large stocks and they can always reorder; these helps them to
start business without too much capital
28. Highlight four ways in which a warehouse is useful to a trader. (4marks)
 Facilitate stabilization of market prices.
 Protection of goods while in the warehouse.
 Encourages specialization in production of goods.
 It makes it easy for the producer to meet unexpected demand.
 It promotes/improves the quality of goods stored before sale.
 Ensures steady flow of goods.
 Ensures continuous production schedules.
 Facilitate production of goods in anticipation of demand. / Storage of goods until they are needed
 Provides room for bulk breaking, packing and blending
29. State four advantages of warehousing to a manufacturer. (4marks)
 Allow continuity of production
 The manufacturer is able to ensure continuous sale of its produce to the market
 Warehousing provides protection for the goods while awaiting sales
 Provides security against theft
 Can prepare goods for sale
 Enables manufactures to look for market
30. State four ways in which a warehouse is of importance to a manufacturer (4marks)
 Goods can be produced in advance to meet unexpected customer demand.
 Production done steadily without rush.
 Production can be continuous if need arises.
 Manufacturer can offer steady supply of seasonal goods.
 Manufacturers can store raw materials.
 Goods are protected from pilferage/ physical damage.
 Goods can be prepared for final scale by branding, grading, blending etc.
 Some goods mature/improve in quality whole still in warehouse.
31. Outline four circumstances under which manufacturer (local producer) would find it necessary to
build own warehouse (4marks)
 When there is need to ensure location of warehouse suitable / convenient to his needs
 Where the producer needs to exercise full control of the warehouse.
 Where the producer wishes to save on costs incurred in hiring a public warehouse.
 Where the producer needs to design the warehouse to suit the goods, s/he deals with/own
specifications.
 Where the producer does not want to be subjected to long procedures that are found in public
warehouses.
 Where the producer is involved in production of seasonal goods and may need to store them till
demand arises. / To ensure adequate storage for raw materials and output.
 Where the producer produces goods continuously on a large scale.

8|Page
 32. Outline four circumstances under which a producer would not require a lot of warehousing space.
 When dealing with perishable goods
 When demand for product is high
 When a firm is located near the market
 When dealing with goods that require order
 When goods are manufactured on order
 When goods are of high value
 Where there is middlemen with warehouse
33. Outline four reasons why a manufacturer should have its own warehouse. (4marks)
 Protection of goods
 Owner may design the warehouse according to his specification.
 No procedure in receiving and issuing goods
 Has full control of the warehouse.
 Enable special handling of goods
 No cost of hiring/ Saving money of hiring
34. What are the advantages of a private warehouse to a trader? (4marks)
 Owner is able to exercise some degree of control over its operation.
 Facilitate special handling storage and protection of goods.
 Owner may design it to suit various needs.
 Owner exercise full control and makes decisions.
 Owner is not held down to procedures of receiving and issuing goods.
 There is cost of hiring space as opposed to public warehouse.
35. State four demerits to a business that uses its own warehouse. (4marks)
 Initial cost of construction is high
 Under utilization of workers and facilities may arise especially during times of low seasons
 The owner meets all the costs of warehouse such as repair and security which increases cost
 May suffer poor management sine they may not employ qualified management personal to run the
warehouse
 The staff may rise to keep illegal goods
36. Explain five benefits small scale business derive from the presence of a warehouse in an area(4marks)
 Ensures stable prices for goods and services due to steady supply of goods
 Ensures steady supply of goods as the goods are stored when in plenty and released when needed.
 Allows preparation of goods for sale such as branding and grading
 Protects goods from damage and adverse weather conditions
 Enables the trader to inspect goods before they can buy
 Improves the quality of goods such as wine and tobacco
 Trader is able to meet unexpected demands in the market.
37. Highlight five ways in which consumers benefit from warehousing facilities provided by a wholesaler
 Consumers may benefit when quality of goods is improved through packing/blending
 Consumers are likely to get goods supplied to them when they need them.
 Consumers may get a variety of goods stored by wholesalers in their warehouses
 Consumers are likely to get goods that are not spoilt/damaged.
 Consumers are likely to buy goods in convenient quantities.
 Warehousing facilities are likely to stabilize prices thereby benefits the consumer.

9|Page
 38. State four reasons why a producer would not need a lot of warehousing facilities (4marks)
 If the business is located near the consumers
 Where the goods produced are highly perishable
 Where his scale of production is low
 Where there are intermediaries to take the role of storage.
 Where the demand of goods is higher than what is produced.
 If dealing with fast moving goods.
 Where goods are produced on order.
39. Mr. Juma is a wholesaler in Bungoma town who owns her own warehouse. Outline four benefits that
will accrue to her from her warehouse (4marks)
 Relieved of storage costs incurred by hiring storage
 He can use the warehouse as long as is necessary
 He is under direct control of the warehouse
 He ensures security of goods from theft or physical damage.
 He can handle the goods the way he wants.
40. Outline four characteristics of public warehouse (4marks)
 They are owned and operated by individuals or companies who do not use them for storing their own
goods.
 They are open to any member of the public who wish to rent storing space for their goods
 The customers pay on the basis of space rented and the period of time required to store the goods.
 They are often situated near terminals as airports, sea-ports and railway station and industrial areas.
This facilitates the movement of goods in and out of the warehouse.
 The rent paid includes charges for insurance and other services i.e. Goods are insured against loss or
damage as a result of fire or theft while they are still in the warehouse.
 They provide other services apart from storing the goods e.g. Grading, packaging, preparing export
samples, preparing market reports and clerical documents
 Imported goods can be sold while they are still in the public warehouse.
41. Explain four advantages of a public warehouses (8marks)
 A public warehouse serves a number of customers that deal with the same product. It assembles the
small orders from these customers and places one order for all of them. This enables them to enjoy
economies of large scale buying and delivery of goods to a warehouse.
 Goods stored in a public warehouse may be sold without their physical movement from the
warehouse.
 Traders can rent space to store their goods
 Traders do not have to construct their own warehouses/do not have to tie up capital in storage
buildings and handling equipment.
 Goods are insured against risks such as damage by fire and theft
 A trader may get a short-term loan from the warehousing firm by using the goods held as collateral
security.
 Apart from the handling, sorting and documentation of goods additional services such as bottling,
bagging and repairs of damaged goods can be offered by public warehouses.
 Sharing equipment and machinery enables the users to reduce handling costs
 Inspection, re-packaging and labeling services provide users of public warehouses the expertise they
themselves may not have.

10 | P a g e
 42. State four features of public warehouses (4marks)
 Owned by individuals
 Rent space to traders
 Goods stored temporary
 Open to all members of the public
 Maybe situated near terminals
 Goods are insured against loss
43. Explain four disadvantages of public warehouses (8marks)
 The hirer is denied the opportunity to physically handle the goods
 The hirer may lose contact with his/her customers since they get goods from a rented warehouse,
away from the hirer’s premises
 The hirer may get poor services or miss space altogether during peak seasons due to stiff competition
for the same facility.
 Documentation involving receipt and release of goods in a public warehouse is likely to be a long
and complicated procedure due to the large number of clients involved.
 Continued renting of space can even be more expensive than constructing one’s own warehouse in
the long run
 Public warehouses are sometimes situated far away from the hirer’s premises unlike private ones
which are usually within the vicinity of the owner’s premises.
 The operations of a general merchandise public warehouse are difficult to automatic because
different kinds of goods need different methods and equipment to handle them.
44. Give four disadvantages of public warehouses to traders. (4marks)
 Competition for limited space.
 Continued renting of space becomes expensive in the long run rather than constructing.
 May involve other costs like transportation if it situated far.
 One has to go through a long documentation procedure while receiving or storing their goods.
 The location may not be convenient to the traders
 There is possibility of mix-up of goods since the facility is shared
 The trader has to operate within the schedules of the warehouse
 There is a time limit within which goods are held in a warehouse after which they can be auctioned
45. State four advantages of public warehouse to retailers. (4marks)
 Retailers can rent space to store their goods
 Retailers have a place to break
 Goods can sell stored while in public warehouse
 Goods are insured against damage caused by fire, theft etc.
 Protects against adverse weather conditions
 Ensure continuous supply of good
46. Highlight four problems experienced by a trader who stores goods in a public warehouse. (4marks)
 Charges levied are relatively high.
 Owner pays extra charges if goods overstay.
 Location may not suit the trader.
 Long procedure in documentation.
 Competition for space with other traders.
 Goods may get damaged.
 Trader may lose contact with customer since they get goods from rented warehouse.

11 | P a g e
 47. Highlight four ways in which Dairy farmer in an area would benefit from a local government
warehouse (4marks)
 Surplus milk will be reserved
 Farmers will increase production
 Milk price will be stabilized
 Milk will reach customers while still fresh
 Income dairy farming will increase
 Increased production will attract establishment of other industries producing dairy products
 Storage will eliminate wastage and fumes from spoiled milk
48. Outline four importance (benefits) of a warehouse to a consumer. (4marks)
 Goods are prepared for sale – branding, blending, sorting, packing.
 Consumers can inspect goods before buying.
 Some goods improve in quality while stored.
 Goods are brought closer.
 Consumers are assured of a steady supply of goods
 They are assured of quality goods- kept in good condition
 They are assured of stable prices
 They get goods in convenient quantities
 Consumers are able to choose the right goods when they are braided, blended etc
 Consumers are able to get a variety of goods.
49. Explain five importance of warehousing to a consumer (10marks)
 Consumer received goods at fair prices since there is no price fluctuation because goods are stored
and their supply regulated.
 Continuous supply of goods – Some goods such as agricultural produce is produced seasonally.
These goods are stored and released gradually into the market hence no shortage.
 Bridge gap between producers and consumers.
 Warehousing offer protection of goods – Meaning that consumers receive goods which are not
damaged.
 Consumers can inspect the goods before they buy them.
 It facilitates steady supply of goods by storing surplus goods and releasing them during times of
shortages.
 May help them in stabilizing prices as supply becomes continuous.
 Some goods when stored improve in quality to the advantage of consumer.
 It can create employment opportunities to consumers
 Enables the consumers to check on quality of goods before they buy.
50. Give four ways in which consumers may benefit from warehousing facilities provided by a wholesaler.
 Consumer may benefit when quality of goods is improved through packing/ blending.
 Consumers are likely to get goods supplied to them when they need them.
 Consumers may get a variety of goods stored by wholesalers in their warehouses.
 Consumers are likely to get goods that are not spoilt/ damaged.
 Consumers are likely to buy goods in convenient quantities.
 Warehousing facilities are likely to stabilize prices thereby benefits the consumer.

12 | P a g e
 51. Outline four ways in which the consumer may benefit from warehousing facilities provided by a
wholesaler (4marks)
 It helps maintain or improve quality of goods: this is mainly for goods that mature over time such as
wine / for them to get goods when still fresh.
 It ensures constant supply of goods: facilitates release of goods in the market regularly which
minimize shortages/ so as to get goods as when needed.
 Preparation of goods for sale: goods are sorted, graded, packed, blended, branded.
 Availability of seasonally produced goods: consumers can access goods that are off season from the
warehouse e.g farm produce
 Stability in prices of goods: ensures constant supply of goods leading to stable prices throughout the
year/due to minimal shortages.
 Creates time utility: ensures that the consumers access and uses goods at appropriate time.
 It enables the breaking of bulk: where s/he is able to buy in convenient or affordable quantities.
 Availability of seasonally demanded goods: That are produced but only come to use at certain times
such as gumboots, umbrellas
 Availing a variety or different goods enabling him/her have a wider choice or satisfy different wants
or tastes.
 Providing security: to avoid loss due to theft or pilferage.
52. Outline four ways in which consumers are likely to suffer in situations where there is no warehousing
 Consumers will suffer from the problem of unstable and high prices
 The consumers will suffer from the shortage of goods as there will be no continuous supply
 Consumers will not have a continuous supply of seasonal produced goods
 Consumers may get damages goods as there will be no protection from bad weather
 Consumers are likely to have limited varieties of goods and also small quantities of goods
 Consumers will not have an opportunity of inspecting goods before buying
 Consumers may suffer from the problem of buying poor quality goods such as wine and tobacco or
banana.
 Consumers may not get goods that are well packed or blended, the work usually done while goods
are in the ware house.
 Quality of goods may be compromised.
 Consumers may not get goods in convenient quantities.
 Consumers may not enjoy lower prices as a result of economies of scale.
 Consumers will lack variety of goods.
53. State four factors that would be considered in establishing a warehouse for imported goods.
(4marks)
 Modern handling facilities that the warehouse should be fitted with to ease operation.
 Building design so as to conform to international standards of imported goods.
 The skill of personnel to handle the goods
 nearness to point of entry
 Existence of basic infrastructure such as road, power, communication to enhance smooth operation.
 compliance with legal requirements
 Storage facilities appropriate to type of goods to be handled.
 Documentation for proper stock control

13 | P a g e
 54. Highlight four features of a bonded warehouse. (4marks)
 Mostly located at points of entry into a country like the ports
 Guarantees payment of customs duty to customs authority
 They are large in size /Very spacious to accommodate even bulky goods like motor vehicles
 Works hand in hand with customs officials for inspection of goods
 Goods are bonded until customs duty is paid
 Goods can be re-exported while in the warehouse
 Storage charges are made on all goods stored in the warehouse
 Goods can be sold while still under bond
 Goods can be inspected and prepared for sale while in the warehouse
 Goods are released only on the production of a release warrant
 They are guarded by customs officials
 They are used for imported/ exported goods
 Dutiable goods kept there are not released until duty is paid
55. Explain five features that you would consider in establishing a warehouse for imported goods.
 Handling facilities/ equipment’s: the warehouse should be equipped with modern/ necessary/
appropriate equipment for ease of operation.
 Security/safely for protecting gods from theft/damage by weather /to ensure safely of personnel.
 Building design/structures: the design has to conform to international/acceptable standards to
handle imported goods.
 Management personnel: these should be properly trained/have relevant skills/ enough to handle the
goods.
 Proximity/nearness to point of entry: this included ports, border points for ease of clearance.
 Existence of basic infrastructure such as good roads/power communication to enhance smooth
operations of the warehouse.
 Compliance to legal requirement/government policy: All relevant legal requirements have to be
met to operate smoothly/avoid conflict with law enforcers
 Storage facilitates/equipment’s: appropriate for the type of goods to be handled/involved
 Documentation/recording system for proper stock control/to monitor inflow/outflow of goods.
56. Outline four benefits for a bonded warehouse to the importer (4marks)
 Goods can be prepared for final sale while still in bond.
 Gives the importer time to arrange for payment of duty.
 The importer can look for market while goods are still in bond.
 Security is provided for the goods while they are in bond.
 Some goods lose weight while in the warehouse so the duty paid becomes lower if based on weight.
 If goods are sold while still in the bonded warehouse, the duty passes to the buyer
 Security is provided for the goods, so the importer is relived of the task of providing security for
his/her goods.
 Some goods improve in quality while in a warehouse for example, wine and tobacco.
57. State four roles the customs officials in a bonded warehouse (4marks)
 Verifying the origin of goods
 Checking the quality of goods to avoid dumping
 Collecting customs duty
 Checking the legality of the goods
 Checking the quantity of imports

14 | P a g e
 58. State four merits of a bonded warehouse to the government. (4marks)
 Enable the government to earn revenue
 Enable the government to control the quality and quantity of goods imported
 Helps the government prevent importation of harmful commodities
 Enables the government to curb tax evasion
 Helps the government collect statistics on imported goods on transit
 Enables the government to inspect goods entering the country/ type of goods
 It helps the government solve the problem of unemployment
59. State four benefits of a bonded warehouse to the government. (4 marks)
 A source of data for planning purposes./ Data / statistics collected on imports entering the country
 Enable the government to control entry of harmful goods./ Detection of illegal goods by the
government which might enter the country
 Enable the government to inspect goods while still under bond.
 Enables the government to regulate the quantity of imports.
 The government uses it to check illegal goods entering the country.
 Enable verification of documents on transit.
 Enable checking of the quality of goods.
 Source of government income from custom / exercise duties
 Implementation of government policy on imports and exports sanctions
 Quality standards may be checked by the government on imports by the Kenya Bureau of standards.
60. Highlight four advantages of Bonded warehouse to the Government (4marks)
 The government gets revenue by levying duty on the goods
 The government is able to control the entry of harmful goods
 The government is able to verify the documents for goods in transit
 The government is able to check on the quantity, quality and the nature/type of goods imported.
 The government is able to check on illegal goods entering the country.
61. Explain five benefits of a bonded warehouse to the government (10marks)
 Inspection of goods- nature of goods that enter and leave the country are inspected to ensure harmful
goods do not `enter into the country.
 Quality of goods – Inspection done by the government maintains the standards of goods entering the
country and ensures good quality
 Quantity of goods – Government can monitor and control amount of goods entering the country.
 Source of revenue – Customs duty collected by government acts as revenue for promoting other
sectors of the economy.
 Documentation and regulation – Documents regarding storage of goods are verified and
government can easily enforce all regulations regarding importation of goods.
 The government is able to check on illegal goods entering the country.
62. Highlight four disadvantages of a bonded warehouse
 The importer may eventually fail to pay customs duties. This forces the customs authorities to
auction the bonded goods in order to recover the duties.
 When the importer withdraws goods from a bonded warehouse he/she ends up paying a higher duty
if he/she had paid the duty at once.
 The importer incurs costs in hiring a bonded warehouse as opposed to if he/she had a private
warehouse

15 | P a g e
 63. Give four reasons why it’s necessary to locate bounded warehouse at the point of entry into the
country. (4marks)
 To facilitate inspection of goods by the government
 To prevent illegal goods/ harmful goods./dangerous goods entering the country
 To collect data of goods movement
 For easy re-exporting.
 To prevent exit without legal authority.
 For easy collection of custom duties on goods entering the country.
64. Under what circumstances can the location of a warehouse be seen to be inappropriate (4marks)
 When it is not accessible
 When it’s placed away from the terminal or source of produce
 When it leads to high operational costs
 When it does not have the right handling equipments and staffs
65. State four reasons why goods may delay in a warehouse (4marks)
 If the importer is not aware of the arrival of goods
 If the importer is still looking for money to settle dues
 If goods are yet to be inspected
 If the importer is still looking for market
66. State four functions of the purchases department of a ware house (4marks)
 Receipt of requisitions
 Purchasing all goods for the organization
 Maintaining the suppliers records
 Managing an effective purchases man power
 Dispatching goods to various departments
67. Outline four features of free warehouse (4marks)
 Little government monitoring
 Usually located in areas convenient for users
 It is easier to clear goods from the warehouse
 It is expensive to store goods in the warehouse
 Store goods that are not subject to custom duty
68. State four advantages of free warehouses (4marks)
 No tax is paid on goods stored.
 Goods cannot be auctioned for failure to pay customs duties
 It is cheaper to store goods in free warehouses as compared to bonded warehouses since there are no
customs duties levied.
 Clearance of the goods from the warehouse is simple since a “release warrant” to prove payments of
duties is necessary
 These warehouses are located at places that are convenient to users
69. State four disadvantages of free warehouses
 The Government does not benefit since no customs duty is levied on the goods stored
 Some unscrupulous traders might use them to store durable goods so as to evade tax.
 Checking and security of goods is more relaxed hence the possibility of storing illegal goods.

16 | P a g e
 70. The table below contains descriptions relating to some types of warehouse. In the space provided,
write the type of warehouse to which each description refers.
Description Type of warehouse
Used to store exports and imports Bonded
Anybody can rent spaces in it for storing goods temporarily Public
Operated for the owner’s exclusion use. Private
Owned and operated by manufacturers and farmers. Producers
Store goods awaiting payment of duties Bonded
Store goods of a particular trader Private
Users hire space in the warehouse. Public
Store goods not subject to any duty Free
Goods can be stored before payment of customs duty. Bonded
Individuals can hire storage facilities. Public
Goods are stored from several manufacturers. Producers
Specialised goods are stored Private
71. Identify four differences between a bonded and a free ware house.
Bonded warehouse Free warehouse
They store dutiable goods Goods stored are not subject to duty
Normally situated are entry points of a country Located at a convenient place for the user
Allows the government to inspect goods stored Goods stored may not be inspected by the
government
Used to control in flow of goods into the country(type Not used to control in flow of goods into the
quality) country (i.e. Type and quality)
72. Identify four differences between a public warehouse and a private warehouse.
Public Warehouse Private warehouse
Anyone can rent space for storing goods Only owner`s goods are stored
Meant for business Meant for individual
Traders do not have to construct their own warehouse Traders has to construct his/her own warehouse
Traders does not have direct control over goods stored Owner of goods has direct control
Long procedure involved Few procedures involved
73. State four possible consequences that may arise from poor arrangement of goods in a warehouse.
 Possible loss of goods through obsolescence/old age/out of fashion/ breakage of fragile goods
 Under-utilization of available space
 Time in lost while trying to access the goods/ Delays in retrieving the goods
 Promotes theft and pilferage goods
 Possible contamination or poisoning of some goods
 Owner would be unaware when to re-order goods
 Pilferage of goods will be high/ Theft of goods.
 Poor utilisation of space/Misuse of space/ Underutilization of space
 Difficulties in stock taking
74. Describe four types of warehouses

17 | P a g e
  Private warehouses: These are warehouses that are owned by private individuals/organizations for
the purpose of storing their own goods only.
 Wholesalers’ warehouses: These are warehouses for storing the wholesalers’ goods as they await
distribution or sale.
 Producers’ warehouses: These warehouses are owned by producers and they are for storing goods
manufactures or finished goods or farmers prior to their demand.
 Retailer’s warehouses: These are warehouses owned by retailers storing their large store duee to
their large and bulky purchases dictated by the nature of their business
 Public warehouses: These are warehouses owned by individuals or organizations who do business
by renting space.
 Bonded warehouses: These are public warehouses for keeping imported goods until customs duties
have been paid against them. They are mainly located at the points through which goods enter a
country
 Free warehouses: These are warehouses in which tax-free goods are kept awaiting sale or collection
by owners. Goods stored in these warehouses can be either locally produced, requiring no taxation or
imported goods for which customs duties have already been paid.
NOTE: All warehouses apart from bonded warehouses are free warehouses since goods held in them are not
subject to control by customs authorities. This includes all private and public warehouses
75. Explain four current trends and emerging issues in warehousing
 Warehousing design-In modern times, there is an increasing emphasis on high ceiling warehouses to
permit storage of more goods and to make it possible for the movement of fork lift trucks and stuck-
cranes
 Handling of goods-Handling includes the steps involved in moving of goods to and from storage. There
is widespread use of modern machines in most warehouses such as conveyer belts, tracks, forklifts and
stuck cranes. The use of automated stocker cranes which more by remote control in a fixed path on guide
rails, is a new development in warehousing. Computerization has also greatly helped in monitoring the
movement of stock in and out of storage. This has eased the handling, especially in loading and
unloading of goods.
 Storage of goods-Storage is the condition of the goods at rest in their assigned areas of the warehouse.
Most warehouses are currently using storage racks that permit replacement or retrieval of goods without
disturbing neighbouring goods.
 Environmental pollution-Goods that expired or spoilt while in the warehouse are sometimes discarded
in a manner or in areas that may cause pollution to the environment e.g. expired chemicals are
sometimes thrown into rivers and oceans thereby endangering the marine life. To avoid the effects of
improper disposal of expired or spoilt goods the warehouse owners should come up with methods that
are environmentally friendly such as recycling of these goods. They should also be socially responsible
for whatever goes out from their warehouses.
76. Highlight any four trends in warehousing (4marks)
 Use of specialized handling machines
 Use of storage racks
 Environmental pollution
 Warehouse designs to allow movement for forklifts and cranes.

18 | P a g e