CCC provides warehousing for other businesses. It has a number of warehouses in different parts of the country. These include bonded warehouses close to the country's main port. [Figure 3.0] Use Fig. 3 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2016). The mark or mark type is shown in brackets.

1. [2] (a) 1 mark for each function stated to a maximum of two functions
2. • Warehouses provide storage of goods
3. • Warehouses provide storage of equipment/tools/semi-finished goods
4. • They protect goods/keeps goods safe/from the weather/damage/theft
5. • They act as a centre for product collection/distribution/goods awaiting transport
6. • They provide a place where goods can be inspected
7. • They even out supply/keep prices stable
8. • They offer special facilities or e.g. such as cold storage
9. • Breaking bulk
10. • Enables production to be ahead of demand
11. • To meet seasonal demand
12. • Provide a place for packaging/grading/sorting/labelling
13. • To allow goods to mature
14. • To help in stock piling
15. Accept any other relevant point.
16. [2] (b) (i) 1 mark for identifying the type of warehouse and 1 further mark for giving a reason
17. • Cold storage warehouse (1) for preventing meat from deteriorating/keeping it cool/meat is a perishable good (1)
18. [2] (ii) 1 mark for identifying the type of warehouse and 1 further mark for giving a reason.
19. • General warehouse (1) as there is little need to prevent deterioration/if the motorcycles are manufactured in the same country, no duty will be due/not a perishable good/there is enough space(1)
20. Note: Incorrect choice of warehouse = 0 marks
21. Accept any other relevant point.
22. [4] (c) 1 mark for stating a reason and 1 further mark for explaining it up to a maximum of two reasons or 4 x 1 marks
23. • A bonded warehouse is where imports are stored (1) before import duty is paid on the goods (1)
24. • The importer may find a buyer before the goods leave the bonded warehouse (1) so the duty is paid just before the sale proceeds are received (1). The importer may even sell the goods in the bonded warehouse (1) so the buyer pays the duty directly to the customs authorities (1)
25. • Economises on working capital (1) as the money is not tied up in paying for import duties (1)
26. • The goods may be withdrawn in separate groups (1) so that the import duty does not have to be paid all at once/spread the payment (1)
27. • Importers may break down (1) or re-package bulk in the bonded warehouse (1) add value to the goods (1) allows goods to mature (1)
28. • Important for importers in the re-export trade (1) so the duty does not have to be paid at all (1)
29. Accept any other relevant point.
30. [6] (d) (i) Level 2 (4-6 marks) Has discussed both locations and has given a reasoned recommendation. (If a candidate has discussed only one location award 4 marks max).
31. Level 1 (1-3 marks) Has commented on one or both locations with/without a recommendation
32. • A cold storage warehouse in the centre of a farming area would be close to the fruit, vegetables and meat produced in that area.
33. • Farmers would minimise their transport costs, and the products would be available for sale in that area.
34. • A cold storage warehouse near the country's main seaport would store the products prior to export.
35. • They would have to be transported to the warehouse by refrigerated truck.
36. • The best location depends on the amount of export sales. If most of the products are exported then the seaport location would be better. If most is sold within the country then the farming area is better.
37. Accept any other relevant point.
38. [4] (ii) Valid points include (Any 4 × 1 marks)
39. • Seasonal production of soft fruits/raspberries/strawberries (1) can be kept in freezers (1) and sold throughout the year (1) so that they can be produced ahead of demand (1)
40. • Goods can be kept for a long time (1) preventing them from going bad (1), e.g. vegetables (1)
41. • Some goods can only be harvested at certain times of the year (1), e.g. apples (1) so cold storage warehouses keep them fresh (1) until demand increases (1) avoiding price fluctuations (1)
42. • Most cold storage warehouses have a cool area (1) as well as a deep frozen area, so hard fruits such as apples/pears (1) can be kept in the cool area and also sold throughout the year (1) so that they do not run out (1) by controlling supply(1)
43. Accept any other relevant point.