4 (a) Explain four reasons why the level of inventory is important to TT. Reason 1: Reason 2: Reason 3: Reason 4:

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] Reason: To earn revenue from sales – of nursery equipment.
2. [1] Explanation of reason: To ensure demand can be met to avoid losing customers – for pushchairs/strollers.
3. [1] Reason: Without inventory there are no products for customers to see.
4. [1] Explanation of reason: So no toys will be sold.
5. [1] Reason: To meet unexpected increases in demand.
6. [1] Explanation of reason: For products aimed at babies up to teenagers/toys are often fashionable and children will not want to wait.
7. [1] Reason: Ties up cash unnecessarily.
8. [1] Explanation of reason: If too much inventory of toys cars is held.
9. [1] Reason: Too much inventory increases risk of out of date / theft / damage.
10. [1] Explanation of reason: For nursery furniture.
11. [1] Reason: May take up too much storage space.
12. [1] Explanation of reason: In the toy shop.
13. [1] Reason: May allow a variety of different products to be sold.
14. [1] Reason: Too little inventory could damage the reputation of the business.
15. [1] Explanation of reason: To avoid losing customers to competitors.
16. [1] Reason: To avoid running out of certain items of inventory in the shop.
17. [1] Reason: Long delivery / lead time.
18. [1] Explanation of reason: Because some toy manufactures take 4 weeks for delivery.
19. [1] Reason: Allows quick replacement of faulty goods.
20. [1] Reason: Too high inventory may indicate a product not selling well.
21. [1] No misleading promotion (Effect): Toys cannot be described as performing a particular function and then not being able to do this, for example a toy car advertised as being suitable for up to a certain weight of child when the toy car is not strong enough to hold that weight.
22. [1] No misleading promotion (Effect): Price cannot be advertised as being reduced when it has not been previously sold at the higher price – so any price reductions at the toy shop must be genuine reductions – or TT could be sued/fined.
23. [1] No misleading promotion (Effect): Toys cannot be advertised as suitable for babies when the toy has small parts that could choke a baby and are therefore unsuitable – may limit some of the claims made in TT advertisements - need to make sure any claims about toys are correct – takes time and effort to check up on facts from toy manufacturers.
24. [1] No misleading promotion (Effect): May increase costs if have to change current advert/promotion.
25. [1] All goods must be safe for the consumer (Effect): Toys sold must be safe for children as if a child is injured whilst playing with a toy sold by TT then could be sued for damages – increases costs / TT will gain a poor reputation with consumers – lose sales.
26. [1] All goods must be safe for the consumer (Effect): If a toy car easily breaks, then TT will incur higher costs of having to replace the toy car – then return these to the manufacturer.
27. [1] All goods must be safe for the consumer (Effect): May need to find new supplier – higher unit costs / time taken to find new supplier.
28. [1] Restrictions on the type of packaging allowed (Effect): Higher cost for toy manufacturers – may be passed on to TT as higher cost price – higher price to customers - reduced demand - lower sales/revenue.
29. [1] Restrictions on the type of packaging allowed (Effect): Toys may be more easily damaged if less packaging used - increased cost for TT of replacement toys.
30. [1] Restrictions on the type of packaging allowed (Effect): Toys may be less attractive if there is no attractive packaging used – lower sales for TT / TT may need to change to other types of toys.
31. [1] Conclusion (No misleading promotion): As TT is a toy shop it will need to make sure its advertising of toys is not misleading because it may gain a bad reputation if claims about the toys it sells are not true, so this is the most important legal control for TT. It can easily make sure it does not advertise lower price sales when the prices have not been reduced. Packaging is likely to be provided by the toy manufacturer and so is unlikely to affect TT. As TT sells branded goods then these are all likely to have been tested and are safe for children.
32. [1] Conclusion (All goods must be safe): Toys being safe will have the greatest effect on TT if this legal control is not followed as TT could be sued for damages and this will raise its costs and result in a bad reputation leading to lower sales at the toy shop.
33. [1] Conclusion (Packaging restrictions): Restrictions on the type of packaging will have the greatest effect on TT as the toy manufacturer may have to increase its prices to TT and therefore TT may need to raise its prices leading to lower demand and revenue.