The businesses in Fig. 3 use warehousing. A Tom, a farmer, owns barns. B Abel Ltd, a wholesaler, operates a cash and carry warehouse. C Karina, a manufacturer, uses a warehouse. D Betterbuy, a nationwide chain of supermarkets, has regional distribution centres (RDCs). E Costimp Ltd operates several bonded warehouses. [Figure 3] Use Fig. 3 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (May/June 2012). The mark or mark type is shown in brackets.

1. [1] (a) (i) A (Tom)/C (Karina)
2. [1] (a) (ii) B (Abel Ltd)
3. [1] (b) (i) D (Betterbuy)/B (Abel Ltd)
4. [1] (b) (ii) E (Costimp Ltd)
5. [2] (c) Any two points × 1 mark each or one well explained point × 2 marks:
6. because it does not offer credit to customers and it does not offer delivery of goods
7. offers self service
8. less administration.
9. Any other relevant point.
10. [4] (d) (i) Any four points × 1 mark each or two well explained points × 2 marks:
11. enables the supermarket chain to act as its own wholesaler and supply the individual supermarkets
12. enables the supermarket chain to buy in large quantities directly from suppliers and so obtain discounts
13. enables the supermarket chain to keep its stores well supplied and, because they are near to the stores, save on storage costs at the individual supermarkets and also save on transport costs
14. award max of 2 marks for general points relating to warehousing such as provides storage for the protection of goods/breaks bulk.
15. Any other relevant point.
16. [4] (d) (ii) Any four points × 1 mark each or two well explained points × 2 marks each:
17. they are often located at airports and ports where goods are imported and exported
18. they provide storage for dutiable goods on which duty has not yet been paid
19. they enable an importer to look for buyers while the goods are in bonded warehouse
20. goods can be sold while in bond and the buyer pays the duty
21. they enable a trader taking part in the re-export trade to import, process the goods and then re-export without the payment of duty
22. they enable goods to be processed while in bond – blending, packaging, bottled
23. without bonded warehouses, international traders would find it difficult to trade in some goods.
24. Any other relevant point.
25. [6] (e) Level 2 (4-6 marks)
26. Has discussed the need for barns for Tom, a farmer involved in primary industry and has shown, with reasons, whether or not Tom needs barns for storage. (If a reasoned answer is given without the context of Tom, the farmer, award 4 marks max.)
27. NB There is no need to show the argument for not having barns for storage.
28. Tom as a farmer will grow crops and/or rear livestock. He will need storage for his machinery, seeds and fertilisers. He may also keep some of his livestock in barns at particular times of the year. Tom may specialise in a particular crop and so have special storage e.g. producer of wheat would have a grain silo. He may also have cold storage on his farm if he is producing perishable crops that he wishes to keep for some time, especially if he hopes that the price will rise. He may need storage if he sells direct to consumers and operates a farm shop.
29. On the other hand, Tom is likely to sell his crops soon after they are produced. In some countries he may sell to a marketing board, in other countries direct to food processors. This will mean that he does not need too much storage and so does not have to bear the risks of his crops being damaged or going bad. He produces according to the seasons so sometimes his need for barns may be greater than at other times of year.
30. Tom may, however, be a subsistence farmer and so needs a barn to store his crops for his own use.
31. Tom is, therefore, likely to have barns and to need them at certain times of the year.
32. Level 1 (1-3 marks)
33. Has commented on the use of storage by a farmer indicating that Tom needs/does not need barns.
34. Tom will need storage. He stores crops, seeds and machinery. If he did not store them, they might be lost or go bad. He needs storage before he sell the crops or while he waits for transport. Storage is important to him.