Read the statement below and answer ALL five questions that follow: Material costs play a crucial role in determining the overall cost structure of an organization. Effective management of material costs involves a combination of strategic sourcing, risk management, supplier relationships, and continuous monitoring of market trends. Organizations that can adapt to fluctuations in material costs and proactively manage their supply chains are better positioned to maintain competitiveness and financial health. You are managing the purchasing department of eThekwini Municipality, in KwaZulu Natal, Durban-South Africa. Answer the following questions focusing on how your position will assist in creating value to the Municipality in terms of cost reduction when buying its goods and services.

QUESTION ONE (20 Marks) Examine the several necessary processes in the purchasing process that will assist in costs reduction at the Municipality. Use Practical examples to support your answer.

QUESTION TWO (20 Marks) As the purchasing manager, you are aware that sometimes your suppliers supply goods without billing for them, necessitating your request for the invoices in order to complete the transaction. 2.1 Critique the reasons for the municipality withholding payment of the invoice until after the goods have arrived. Use practical examples to support your answer. (5 marks)

2.2 Critique the reasons of passing the invoice for payment before the receiving, inspecting, and accepting the material. Refer to the municipality. (5 marks)

2.3 Use relevant literature and analyse any five benefits of Information Systems Technology to the eThekwini Municipality Use practical examples to support your answer. (10 marks)

QUESTION THREE (20 Marks) Discuss the cost of inventory and explain how eThekwini Municipality can transform its inventory management process to be proactive. Use the relevant examples to justify your answer.

QUESTION FOUR (20 Marks) The eThekwini Municipality requests your advice on how to reduce inventory expenses for its coffee shop. The annual demand of fresh milk (boxes of 6 litres) = 750 units, delivered purchase cost = R35/units, Annual carrying cost percentage= 25 percent, Order cost = R50/order. The lead time is 10 working days. Assuming 20 working days per month.

4.1 Determine the Economic Order Quantity (4 marks)

4.2 Determine the reorder point (4 marks)

4.3 Determine the average inventory (4 marks) 4.4 Suppose orders are placed only at review time. Find the optimal period and the optimal order quantity. (8 marks)

QUESTION FIVE (20 Marks) Purchased goods must be transported from the various suppliers to the main office at eThekwini Municipality.

5.1. Fully discuss any six factors to be considered by the eThekwini Municipality when selecting mode of shipment, carrier and routing. Use the relevant examples to support your answer. (12 marks)

5.2 Assess the four reasons why the selection of the free-on-board point is important to the eThekwini Municipality as a purchaser. Provide relevant examples to support your answer. (8 mark)