Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Fundamentals of Logistics > Chapter 7 - Purchasing > Flashcards

Chapter 7 - Purchasing Flashcards

1
Q

Definition of Purchasing

A

The acquisition of needed goods and services at optimum cost from competent reliable sources to maintain a smooth flow of goods and services for manufacturing and or any business activity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Roles of Purchasing

A
  1. Identify requirements for goods/materials/services
  2. Find reliable suppliers
  3. Price negotiations
  4. Comparison of delivery terms
  5. Establish order quantities
  6. Write request for bids & awarding supply contracts
  7. Coordinate delivery with warehouse
  8. Product testing & quality control
  9. Manage budget & payment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q
  1. Identifying requirements for good/materials/services
A

Determine the specific needs & criteria to obtain the necessary items or services

If need screw, what type & size

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q
  1. Find reliable suppliers to meet requirements
A

Evaluate & select suppliers

Asses trustworthiness, performance history to make sure they can deliver on time and with good quality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q
  1. Negotiate price
A

Discuss and reach agreement on the price

Goal is to arrive and a mutually acceptable & fair pricing for both parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q
  1. Comparison of delivery terms
A

Evaluate & compare aspects related to delivery

Asses terms, & condition & logistics associated with the delivery

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q
  1. Establish order quantities
A

Determine appropriate quantity to be ordered

Asses demand, inventory levels, production requirements, & cost considerations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q
  1. Write request for bids & awarding supply contracts
A

Select bids from potential suppliers & award contracts for the provision of goods, materials & services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q
  1. Coordinating delivery with warehouse
A

Managing timing & logistics of delivery

Align delivery with the warehouse’s ability to accommodate & store them

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q
  1. Product testing & quality control
A

Evaluate & verify quality, performance & compliance of goods

Conduct test, inspections to ensure goods meet the standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q
  1. Managing budget & payments
A

Plan, monitor, & control financial resources to ensure effective budget allocation, expenditure tracking & timely payment of financial obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

6 Areas of Purchasing

A
  1. Market Trends
  2. Fluctuations in Raw Material
  3. Distribution Channel
  4. Outsources to Experts
  5. Networks with Peers
  6. Develop Collaborative Relationships with Suppliers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q
  1. Market Trends
A

Direction of a financial market or asset price within a certain period

Factors affecting: Investor sentiment, supply & demand, economic condition, political

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q
  1. Fluctuation in Raw Material
A
  • Fluctuation will affect cost of goods and goods sold to the customer

Buying when the price fluctuate will benefit the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q
  1. Distribution Channel
A

Buy directly from the manufacturer

Lower prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q
  1. Outsources to Experts
A

Outsource purchasing to expert than focus on specific areas better

Their relationship with supplier may give them preferential pricing

17
Q
  1. Network with Peers
A

Strong networks of business connection can make purchasing easier

Network of peers can help identify suppliers that can offer a variety of prices & quality, depending on your budget

18
Q
  1. Develop Collaborative Relationships with Suppliers
A

Good relationships with supplier can improve the purchasing process

19
Q

Example of inventory Types

A
  1. Raw Material - Used to produce finished products
  2. Work in Progress - Needs additional work
  3. Finished goods - Completely produced & ready for sale
  4. Component - Used to create & finish products
  5. Maintenance, Repair & Operations (MRO) Goods - Used withing manufacturing, without directly making up any part of the finished product (Batteries)
20
Q

Inventory Management Terms

A
  1. Re-Order Level (ROL)
  2. Re-Order Level Quantity (ROQ)
  3. Economic Order Quantity (EOQ)
  4. Lead Time
  5. Stock Out
  6. Service Level
  7. Buffer Stock
  8. Inventory Turnover
  9. Stockholding & Stockholding Costs
21
Q

Re-Order Level (ROL)

A

Stock level where a replenishment order must be initiated

22
Q

Re-Order Level Quantity (ROQ)

A

Quantity ordered when ROL is reached

23
Q

Economic Order Quantity

A

Most economic quantity to order to achieve optimum cost

24
Q

Lead Time

A

Total time from stock reached ROL until goods are delivered and ready for issuance

25
Q

Stock Out

A

Stock unavailable when needed

26
Q

Service Level

A

Percentage ratio of complete quantity of goods issued to the quantity requested

27
Q

Buffer Stock

A

Extra stock to avoid stock out due to usage or longer lead time

28
Q

Inventory Turnover

A

Number of times the average inventory is sold per year

29
Q

Stockholding & Stockholding Costs

A

Stockholding - Inventory held on hand

Stockholding Costs - Cost of holding stock

30
Q

Benefits of Inventory

A
  • Take advantage of quantity discount
  • Avoid stockout
  • Accurate order fulfilment
  • Inventory speculation
  • Increased customer satisfaction
31
Q

Technique for Inventory Management

A
  1. Buffer / Safety Stock
  2. Activity Based Costing (ABC) Method
  3. Just-In-Time Inventory
32
Q

Buffer Stock

A

Additional inventory to cater for emergency cases

33
Q

Activity Based Costing (ABC) Method

A

Prioritize inventory management effort by focusing on more valuable items (Category A), while allocating less attention to lower-value (Categories B &C)

Fundamentals of Logistics (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions