Read the statement below and answer all three questions that follow: Studies show that material costs is 2.5 times the payroll costs. It is for this reason that companies place a high value on procurement professionals who can improve product quality while also saving money.

https://www.intechopen.com/books/modern-perspectives-in-business-applications/introductory-chapter-purchasing-andsupply-management.

You are managing a purchasing department of a construction company in South Africa. Prepare a presentation on the following two questions focusing on how your department will assist in creating value to your company in terms of cost reduction and achieve competitive advantage.

QUESTION ONE

HYPERPAINT in Durban is selling two different sized container of paints (3 litres and 5 litres). The 3 litres container currently has an offer that reads Buy ONE and get the second HALF PRICE! The price of the small container is R 85 and the 5 litre container is R100. Assess which container of paint will be considered as the Best Buy.

QUESTION 2

In the context of the above statement, critically discuss the cost of inventory and explain how the construction company can transform its inventory management process to be proactive. Use relevant examples to justify your answer.

QUESTION 3

Use ABC Classification and the information in the table below to show how the construction company can classify its stationery using the annual consumption value.

Item Units sold (Annual number) Cost per unit Pen 21 000 R5.5 Highlighters 7 800 R5 Boxes of pencils 12 000 R13 Sharpener (Box) 48 000 R34 Box of Rubber 1400 R11 Eraser 41 000 R19 Glue 5 100 R 7.5 Scissors 9 500 R 5.5 Staplers 9 000 R 9 Notepads 11 000 R10 TOTAL