(a) What is a warehouse? (b) Describe any three types of warehousing. (c) State six functions of a warehouse

Answer Details

(a) What is a warehouse?

A warehouse is a building or premises used for the safe storage of goods from the time they are produced or bought until they are needed for sale, use or distribution. It creates time utility by holding goods until they are demanded.

(b) Three types of warehousing described

1. Private warehouse: Owned and operated by a manufacturer, wholesaler or large retailer solely for storing its own goods. It gives full control but is costly to build and maintain.
2. Public warehouse: Owned by an individual or company and rented out to the general public/traders who pay a fee to store their goods. It suits firms that cannot afford their own warehouse.
3. Bonded warehouse: A warehouse licensed by government/customs where imported goods on which duty has not yet been paid are stored under customs control. The goods are released only when the import duty is paid.
4. Government warehouse: Owned and run by government for storing goods such as agricultural produce, strategic reserves or seized/uncleared goods.

(c) Six functions of a warehouse

1. Storage: Keeps goods safely until they are needed.
2. Protection of goods: Guards goods against theft, damage, pests and weather.
3. Stabilizing prices: Steadies supply and prices by releasing stock as demand requires.
4. Facilitates bulk buying and breaking bulk: Receives goods in large quantities and issues them in smaller lots.
5. Preparation of goods for sale: Allows grading, sorting, blending, packaging and labelling.
6. Ensures continuous/steady supply: Makes seasonal goods available all year round.
7. Provides finance/collateral: Warehouse receipts can be used as security to obtain loans.