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Business Management 1 > Business Functions: Purchasing > Flashcards

Business Functions: Purchasing Flashcards

1
Q

What is the purchasing function?

A

The management of a company’s external resources in a way that all supply is secured at the most favourable conditions

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2
Q

What does a value chain analysis do?

A

Evaluates the activities that occur within and around an organisation in light of the organisation’s competitive strength

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3
Q

What does a DuPont measure?

A

Assets ander their performance

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4
Q

What is corporate coherence?

A

The extent that parts of an organisation are managed as a single entity

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5
Q

What is purchasing maturity?

A

The professionalism involved in purchasing at business unit level

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6
Q

What does centralised purchasing involve?

A

Having a central location for coordinating all purchasing activities

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7
Q

What does decentralised purchasing involve?

A

Each business unit operating autonomously in its purchasing activities

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8
Q

What is the local statutory body responsible for industrial standardisation?

A

The South African Bureau of Standards (SABS)

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9
Q

What is the international body for standardisation?

A

The International Organization for Standardization (ISO)

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10
Q

What are the factors of consideration of inventory levels?

A

Carrying costs
Ordering costs
Stock-out costs
Setup costs
Variations in delivered costs

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11
Q

What are the 2 basic inventory management systems?

A

Fixed order quantity system (quantity-based)
Fixed period system (time-based)

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12
Q

What inventory model does the fixed order quantity system make use of?

A

Probabilistic inventory model (Q model)

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13
Q

How does the basic fixed order quantity model work?

A

A ‘reorder level’ is set which, when reached, triggers actual ordering of stock in the economic order quantity (ideal order quantity). This reorder point should leave enough stock on hand to make it through the lead time.

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14
Q

What is the formula for EOQ?

A

square ( 2 × annual demand × order cost ÷ annual inventory holding cost per unit)

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15
Q

What is the formula for ROL?

A

unit consumption × lead time

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16
Q

How do fixed period inventory systems work?

A

Each inventory item stock level is reviewed after a predetermined time and reorders are placed.

17
Q

What is MRP?

A

Materials requirement planning is an inventory management system designed for production planning, scheduling and inventory control

18
Q

What should be considered before deciding on quantity to be purchased?

A

Availability of funds
Safety stock
Quantities already ordered

19
Q

What are the 3 major inputs of an MRP system?

A

Master production schedule
Bill of materials
Inventory records

20
Q

What is a just-in-time IMS?

A

Making only what is needed, when it is needed, in the amount needed.

21
Q

What is a quick response system?

A

A set of actions that take place throughout a supply chain in order to reduce replenishment lead time

22
Q

What are the elementd of a QR system?

A

Point of sale tracking
JIT production and logistics
Electronic data interchange
Partnership
Value-added networks

23
Q

What is an automatic replenishment system?

A

An ARS determines ‘what’, ‘how much’ and ‘when’ a particular item should be ordered

24
Q

What is an efficient consumer response system?

A

ECR is a consumer-driven distribution system where production is managed in accordance with consumers’ point of sale activities

25
Q

What is supplier development?

A

The process of improving supplier performance

26
Q

Who should the ‘right price’ be fair and reasonable for?

A

Both seller and buyer

27
Q

What are the 5 rights of purchasing?

A

Right quality
Right quantity
Right time
Right place / source
Right price

28
Q

What is outsourcing?

A

The act of transferring work to an external party

29
Q

What is insourcing?

A

Internal production

30
Q

What are the two classifications of insourcing?

A

Onshore
Offshore

31
Q

What is onshore insourcing?

A

Production done within an organisation and domestic borders

32
Q

What Is offshore insourcing?

A

Production done within an organisation but outside domestic borders

33
Q

What is a request for information?

A

An RFI is a means of collecting information from different suppliers

34
Q

What is a request for proposal?

A

An RFP is an invitation to suppliers who, through a bidding process, can then submit a relevant proposal

35
Q

What is a request for quote?

A

An RFQ is an invitation to suppliers to submit a bid on projects

Business Management 1 (10 decks)

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