CHAPTER 3 Flashcards
PURCHASE REQUISITION FORM
It is a document sent to the purchasing department and usually that originates from storeroom staff, materials record clerk, a research engineering, or other department employee or supervisor who needs materials.
Example: A purchase requisition form is submitted by the engineering department to request raw materials for a new project.
PURCHASE ORDER
It is an authorization signed by the purchasing agent sent to a vendor (supplier) to supply goods at the agreed price, specification, terms and conditions of the product and at a specified time and place of delivery.
Example: The purchasing department issues a purchase order to a supplier for the delivery of 100 units of a specific product.
RECEIVING REPORT
It is a document prepared by the receiving department that shows the purchase order number, the account number to be charged, the name of the vendor (supplier), and details relating to transportation, and the quantity and type of goods received.
MATERIAL REQUISITION FORM
It is a document authorizing the material storekeeper to deliver materials to the department presenting the requisition form.
BILL OF MATERIALS
It is a list of materials needed to produce a product.
RETURN MATERIALS REPORT
It is a document prepared when some materials requisitioned were not used in the production and are returned to the material storeroom staff.
DEBIT OR CREDIT MEMORANDUM
It is a document prepared when the type, quantity, quality of goods ordered differs from the goods shipped by the suppliers and an adjustment must be made to the supplier’s invoice.
PROCUREMENT
Means the acquisition of goods and/or services at its best possible costs (minimized cost), in the right quality, quantity, at the right time in the right place from the right source (supplier).
MATERIAL CONTROL SYSTEM
Is defined as a systematic control over purchasing, handling, storing and use of materials to minimize wastes, loss of materials from the time it is received, stored and issued, and operational inefficiencies.
ORDER CYCLING METHOD
Materials on hand are reviewed on a periodic cycle and orders are placed to maintain the desired level of inventory.
ABC ANALYSIS
This method is used by the company that has products with different sizes and values.
TWO-BIN SYSTEM
This method divides the materials into two bins: one bin is used for normal operation and the other bin is used for backup purpose only.
MINIMUM-MAXIMUM SYSTEM
It is the simplest method to manage inventory. The company will only set the minimum and maximum level of inventory on hand.
AUTOMATIC ORDER SYSTEM
An order is placed automatically when the level of inventory reaches the predetermined order point. It is used by the companies that have a computerized system.
PHYSICAL AND OPERATIONAL ASPECT
This deals with the safeguarding of materials from receiving, handling, storing, and its issuance to the production department, recording and its eventual sale to customers.
