Page 17 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes 1.6 Keywords

Acquisition: The act of acquiring or gaining possession.
Capital Investment: It refers to funds invested in a firm or enterprise for the purposes of furthering
its business objectives.

Carrying Costs: This is the cost a business incurs over a certain period of time, to hold and store
its inventory.
Competitive Edge: Competitive Edge is having a clear advantage over the competition in terms
of one or more elements of the market mix that is valued by potential customers.
Inventory Control: Inventory Control is the supervision of supply, storage and accessibility of
items in order to ensure an adequate supply without excessive oversupply.
Lead Time: The time between the initiation and completion of a production process.
Materials Management: Material management is an approach for planning, organizing, and
controlling all those activities principally concerned with the flow of materials into an
organisation.
Outsourcing: Outsourcing is the contracting out of an internal business process to a third party
organization.

1.7 Review Questions

1. What do you mean by materials management?

2. Discuss the scope of materials management.
3. Explain the main objectives of materials management.
4. What is the significance of materials management?
5. Describe materials management in design and development.
6. How will you interrelate production and material management?

7. How does cooperation between sales and materials management affect company’s
marketing strategy?
8. Which are the three cost categories determined by materials management?

9. Is material management considered a routine function? If yes, explain why?
10. How can working capital requirements be reduced through materials management?

Answers: Self Assessment

1. Business 2. Quality
3. Resources 4. Authority, responsibility

5. Maintaining competitiveness; satisfactory profitability
6. Foreign Exchange 7. End product
8. Value added 9. Efficient management
10. Materials Costs 11. Supply

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