QUESTION 3 (25 MARKS)

REQUIRED: Carefully answer the following questions within their context. MARKS

(3.1.) Clearly differentiate between the following concepts and in each case, explain in what way each impacts procurement decisions when deciding on a prospective supplier:

a) Credit policy

b) Creditworthness

c) Collection policy

d) Cash discounts 12

(3.2.) What are the five-Cs of credit, and why is it important to consider them when profiling prospective suppliers?

(3.3.) Why do companies hold inventories?

TOTAL MARKS FOR QUESTION 3 25