Question

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Q8. In a warehouse, all kind of things happen. All activities have a function. As a total it is often called ‘warehouse functions’. State and explain in brief five different warehouse functions (warehouse processes)? (4+4+4+4+4= 20 Marks)

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Answer 1

The place where goods are stored and accumulated is known as a warehouse.

The different warehousing functions are as follows.

1. Storage: This is the most basic function of a warehouse. The excess goods are stored by the manufacturers and wholesalers in warehouses. As and when needed, the goods are supplied to the consumers.

2. Risk bearing: Storing the goods in a warehouse exposes the goods to a lot of risks, such as theft, fire, deterioration etc. But, warehouses have an additional function of protecting the goods against all these risks, thus construction of warehouses is done in such a manner that the risks are minimized.

3. Price stabilization: Warehouses try to create time utility by making the goods available to the consumers when it is required to them. They minimize the gap between time of production and consumption. Price stability is achieved through creating time utility. With the help of warehouses, fall in the prices due to excess supply and rise in the prices due to excess demand is minimized.

4. Financing: The goods stored in the warehouses act as a collateral security. The warehouse keeper has an option to raise loans by mortgaging the goods. Banks also advance payment on the basis of good stored in the warehouse. Thus, warehouse is an important source of financing for the businessmen.

5. Grading and Packing: Goods can be graded and packed in convenient sizes as required by the warehouse.

Thus, these are the five functions of warehouses.

References:

Your Article Library, Smriti Chand, "Warehousing: Function, benefits and types"