Page 181 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes Lowest price bids
3. Vendor Rating Index (Price) =
Total No. of deliveries
4. Vendor Rating Index = VRI (Quality) × A + VRI (Delivery) × B + VRI (Price) × C, Where A,
B and C are the weights given to the three vendor rating indexes by the materials manager.
Material Planning and Forecasting Indexes

Forecast price of material
1. Forecast Accuracy Index =
Actual price of material
Number of rush orders placed
2. Planning Efficiency Index =
Total No. of orders
Efficiency Indexes

Total purchase of dept. cost
1. Order Cost Index =
Total No. of order placed
Total purchase value
2. Purchase Efficiency =
Total expenses of purchasing department
Total Sales
3. Sales/Purchase Index =
Total purchases
Inventory and Stores

No. of times out of stock
1. Out of Stock Index =
No. of times requisitioned

Average work-in-progress
2. Work-in-progress Index =
Total production value annually
Store Indexes

Total handling cost
1. Handling Cost Index =
Total value of material received & issued
Value of scrap disposed
2. Scrap Disposed Index =
Total value of Scrap
Value of Scrap sold
3. Material Utilization Index =
Value at which bought
Self Assessment

Fill in the blanks:
9. The evaluation of the materials function is usually done by the ………......………. on the
basis of periodic reports emanating from the materials wing.
10. ………......………. is a communication which helps in setting things right and goes a long
way in efficient functioning of the department.

11. In order to take suitable remedial ………......………. and to improve materials activities in
the organization, the reports should be submitted at the appropriate time.
12. The ………......……… and content of the reports depend upon the level to which it is
intended.

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