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Unit 4: Material Control

Usually, the purchase department selects the supplier who has quoted the lowest price and Notes
if he satisfies the other conditions. If the purchase department wants to deviate from this
method of selecting the lowest quoted supplier, supporting reasons are to be given in the
comparative statement of quotations.
(iii) Purchase Order: After choosing the supplier, the purchase department will prepare the
purchase order to be placed with the supplier. The purchase order is in the form of an
agreement with the suppliers which binds both the purchaser and supplier. Because, when
the order is placed, the supplier is bound to supply the necessary materials as per the terms
and conditions of the order. On the other hand, the purchase order also binds the purchase
manager to accept the delivery of necessary materials and to make necessary arrangement
for payments, because it is the purchase manager who has placed the order.

The format of purchase order is shown below:
Kartik Company Limited
purchase Order
To, purchase Reg. No. : ………………….
The Supplier, Date : ………………….
…………………. Quotation No. : ………………….
…………………. purchase Order No. : ………………….
Dear Supplier,
Your Quotation No. …………………. dated …………………. has been accepted. Hence you are
requested to supply the following materials in accordance with the terms and conditions.
Serial No. Description Quantity Rate or Amount (`) Delivery Remark
of Materials price Date (If any)

place of Delivery : ………………….
Terms of payment : ………………….
Packing Charges : ………………….
Excise Duty : ………………….
Other Conditions : …………………. For Kartik Company Limited
Signature of purchase Manager
Five copies of the purchase order will be prepared by purchase manager, One each to the
supplier, store-keeper, receiving and inspection department, accounts department and to
the office record of the purchase department itself.
(iv) Receiving and Inspecting of Materials: In large organization, a separate receipt and
inspection department independent of stocking locations should be set up to receive
and inspect the materials. But in small unit, the work of receiving the materials may be
entrusted to the storekeeper. However, these two receiving and inspection are important
functions. The receiving department receives, unloads, unpacks and marks the materials. It
also checks the quantity of materials received and compares it with the quantity mentioned
in the purchase order. Any difference between the quantity ordered and the quantity
received will be recorded in the remarks. On the basis of this, receiving department will
prepare the materials received note.

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