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Appendix 2




                     Fashions change each half year in the homeware market, leading to summer
                     and winter collections. RTF has a new procurement director who is experienced
                     in this. She has recently recommended to the board that RTF implements a new
                     computerised inventory system.

                     Currently each six months RTF undertakes an inventory count across all four
                     stores. There is a huge volume of merchandise to be counted some of which
                     takes a considerable amount of time. For example, some of the very expensive
                     curtain materials need to be unrolled and measured as part of the count.

                     The inventory count is reconciled manually to the periods opening inventory,
                     and the sales and purchases for that six months. Inevitably there are
                     discrepancies due to theft and error. Theft costs RTF approximately $10,000
                     per annum across all stores since many of their items are reasonably bulky and
                     therefore difficult to hide.

                     The new procurement director is suggesting that all inventory is bar coded and
                     EPOS tills are installed. This is the type of system her previous employer had –
                     RTF’s market leader.

                     The bar coded items could be scanned at the new tills which would
                     automatically recognise the item and price it according to pre-entered price lists.
                     Currently prices are input manually into a basic till from a price stuck to the
                     goods. The procurement director says the new system will speed up the queues
                     for customers, which occur particularly at weekends, and ensure a happier
                     customer and potentially repeat purchases.

                     The EPOS system would also log sales and returns made so that the period
                     end reconciliation should be more accurate. Sales and returns are currently
                     written down manually in a receipt book at each till. The receipt books are
                     numbered and very few have ever been lost or misplaced.

                     The reason(s) RTF should replace their current systems are:

                     Select all that apply.


                     A     The new system will reduce the time taken to perform the physical
                           inventory count.

                     B     The new system might be cost effective.

                     C     The market leader has the same system.

                     D     The new system will reduce the number of pricing errors made.










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