Sec 8 - Purchasing and Physical Distribution

Question 1

define Purchasing

Answer 1

The function and responsibility of procuring materials, supplies, and services

Question 2

5 ways industrial purchasing is different

Answer 2

1) Purchaser may not interact with supplier
2) Clear product specs are needed
3) Contracts often last over a period of time
4) Controls needed to ensure sound quality and cost
5) Very large sums of money often involved

Question 3

What are 4 categories of purchased items?

Answer 3

1) Raw materials / components
2) Capital items
3) Maintenance, Repair, and Operating supplies
4) Services

Question 4

What are the 6 main activities of purchasing?

Answer 4

1) Establish specs
2) Select suppliers
3) Negotiate contracts
4) Manage purchasing cycle
5) Manage contract buying
6) Monitor supplier performance

Question 5

define sole sourcing

Answer 5

Goods are provided by one supplier. No alternative supplier exists or is qualified

Question 6

define multiple sourcing

Answer 6

goods are provided by more than one supplier

Question 7

define single sourcing

Answer 7

goods are provided by one supplier but other suppliers are available and qualified

Question 8

define consignment

Answer 8

supplier physically gives the product to the customer for use and the supplier retains ownership of the product until it is used

Question 9

define VMI

Answer 9

similar to consignment but the buyer’s forecasts are shared with the supplier

Question 10

define blanket purchase order

Answer 10

long-term commitment to a supplier for a material against which short-term releases will be generated.

Usually only cover one item with predetermined delivery dates

Question 11

define physical distribution

Answer 11

the movement of goods from suppliers to their customers through distribution channels

Question 12

define transaction-based distribution system

Answer 12

sales channel in which the ownership is transferred from one party to the next until it reaches the final customer

Question 13

2 ways that physical distribution adds value to the supply chain

Answer 13

place value – makes good available where customers want them.

time value – makes goods available when customers want them.

Question 14

define distribution channel

Answer 14

the route along which products travel from raw materials to consumption

Question 15

name 8 categories of physical distribution activities

Answer 15

1) transportation
2) distribution inventory
3) warehousing
4) inventory control
5) materials handling
6) order administration
7) protective packaging
8) revere logistics

Question 16

what is purpose of distribution inventory?

Answer 16

To allow quick order delivery or on-hand availability of high demand items. Especially in a make to stock environment.

Question 17

What are the 4 business level objective of Distribution Inventory Management?

Answer 17

1) provide required levels of customer service
2) minimize cost of transportation and handling
3) minimize inventory cost
4) interact with factory to minimize scheduling problems

Question 18

Pull system of Distribution Inventory Planning

Answer 18

DCs use a reorder point with fixed order quantity lot sizes.

Doesn’t matter what other DCs need or what available inventory is at central supply.

Question 19

Push system of Distribution Inventory Planning

Answer 19

Central supply has visibility to DCs inventory balance and demand patterns. Then central supply pushes inventory to the DCs based on a forecast.

Question 20

Distribution Requirements Planning (DRP)

Answer 20

Uses distribution center demand to make forecasts for the factory master scheduling process. Uses a time-phased netting

Question 21

define Transportation

Answer 21

the function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization

Question 22

What are the 2 categories of reverse logistics

Answer 22

1) Asset recovery

2) Green logistics

Question 23

What are the 4 categories of shipping costs

Answer 23

1) Line-haul costs
2) Pickup and delivery
3) Terminal handling costs
4) Billing and collecting costs

Question 24

What are 4 product characteristics that affect carrier rates?

Answer 24

1) Value
2) Density
3) Perishability
4) Packaging