Chapter 8

Question 1

Purchasing function is responsible…

Answer 1

For buying goods and services needed by all departments

Question 2

Products are divided into:

Answer 2

Consumed by business
Bought to be resold
Bought for manufacturing process

Question 3

Purchasing cycle (6)

Answer 3

Send resources to departments or warehouse
Assessing orders
Receiving of order
Place order
Assess and select supplier
Identify business needs

Question 4

To identity business needs

Answer 4

Research needs to be done to know needs and wants of the departments and customers

Question 5

Assess and select best supplier

Answer 5

Must deliver products on time
Consider local and international

Question 6

Assessing supplier

Answer 6

Price
Delivery
Reputation
Labour
Support
Capacity

Question 7

Price is determined by…

Answer 7

Quantity ordered, can negotiate bulk discount

Question 8

Cash discount

Answer 8

Guaranteed when the buyer pays cash or settles debtors account early

Question 9

Seasonal discount

Answer 9

Manufactured goods just before the end of the season

Question 10

Trade discount

Answer 10

Reduction in the listed selling price that the supplier charges

Question 11

Reduction in listed selling price

Answer 11

Based on the relationship and loyalty factors

Question 12

Capacity

Answer 12

Ability of a supplier to supply the right quality goods/services in the right quantity

Question 13

Not right capacity

Answer 13

Can negatively impact the business and cause delays

Question 14

Support

Answer 14

Does the supplier offer training on new equipment

Question 15

Labour unrest

Answer 15

could have a negative impact on receiving orders on time

Question 16

Reputation

Answer 16

Are they well known for being good or being bad

Question 17

Delivery

Answer 17

Critical to see if the supplier will deliver the goods on timeb

Question 18

Placing orders

Answer 18

Ensure correct goods will be delivered
Must have a stock control system

Question 19

Receiving of goods ordered

Answer 19

A control system should be implemented to ensure the quality of the goods is acceptable

Question 20

Delivered control system warehouse clerk

Answer 20

Sign a goods received voucher

Question 21

Assessing orders against invoice

Answer 21

It is important that the purchasing function double checks all the goods that have been received

Question 22

After assessing

Answer 22

Send resources to departments or warehouse

Question 23

Stockpiling

Answer 23

Ensuring there is sufficient stock available

Question 24

Stock piling ensures

Answer 24

Any duplication of stock is eliminated
Risk of theft fire and stock obsolescence is minimised
Savings is respect of storage space

Question 25

Warehousing

Answer 25

Storing resources until they are needed

Question 26

Warehousing consists of

Answer 26

Storage Consolidate Postponement Break bulk and mixing

Question 27

Storage

Answer 27

Ensure there are always more resources than what is needed (buffer stock)

Question 28

Consolidate

Answer 28

When all resources go to a central warehouse then get distributed

Question 29

Break bulk and mixing

Answer 29

The business purchases large quantities at a low price

Question 30

Postponement

Answer 30

Delays occur when products need to be assessed labelled and packaged

Question 31

Types of stock (7)

Answer 31

Raw materials Semi finished goods Finished goods Perishable stock Capital goods Dangerous material Maintenance stock

Question 32

Raw materials

Answer 32

Products extracted in the primary sector

Question 33

Semi finished goods

Answer 33

Goods that have been processed but are not ready for final consumption

Question 34

Finished goods

Answer 34

Goods that are ready to be used by the final consumer

Question 35

Perishable stock

Answer 35

Can be in the form of raw materials, semi finished, finished goods. Requires special storage

Question 36

Capital goods

Answer 36

Machines and equipment used during manufacturing

Question 37

Dangerous material

Answer 37

Must be stored according to prescribed regulations

Question 38

Maintenance stock

Answer 38

Consumed within the business

Question 39

JIT

Answer 39

Just in time

Question 40

Quantity management

Answer 40

There should always be enough stock to meet the needs of the business or external customers

Question 41

Just in time

Answer 41

The products arrive just before they are needed

Question 42

Economises of scale

Answer 42

The business being able to benefit from cost advantages

Question 43

Diseconomies of scale

Answer 43

The size and scale of operations have a negative impact on the cost efficiency of the business

Question 44

Distribution is

Answer 44

Less when the truck is filled to maximum capacity

Question 45

Buying on credit…

Answer 45

Improved cash flow HOWEVER It is important to prevent liquidation