Page 55 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes However, as all the tendering firms may not have the facility of transmitting their quotations
through e-mail, the Ministry/Departments should allow the receipt of quotations through hard
copies as well as by e-mail. The closing date and time for receipt of tenders should be identical
for both types of tenders.

Task Make a visual presentation on the purchase policy and procedures.

Self Assessment

Fill in the blanks:
14. Care should be taken to avoid purchasing quantities in excess of requirement to avoid
……………. costs.
15. At each stage of procurement the concerned procuring authority must place on record the
……………… which weighed with it while taking the procurement decision.

16. Depending on the nature of the required goods, the quantity and value involved and the
period of supply, the purchase organization is to decide the appropriate mode
of…………………. .
4.7 Purchase of High Capital Equipment

In general major equipment includes machinery required for production operations. There are
peculiar problems and considerations involved in non-repetitive purchases mainly purchase of
major capital equipment. For accounting purposes it is considered as fixed assets to be capitalized
and depreciated over the period of economic life of the equipment.

Capital equipment is defined as non-expendable equipment with a system acquisition cost of
$5,000 or more and a life expectancy of at least two (2) years.

Did u know? A Capital Equipment purchase is equal to or greater than $5,000 and has a
useful life span of one or more years.
Equipment purchases usually involve a substantial financial commitment – the purchase price
of the equipment and the cost to service and repair it. The primary reason to lease rather than
buy an item is because the needed item is so expensive that its direct purchase is not possible and
other financing mechanisms are unavailable or more expensive than leasing. In order to be
considered for leasing, the item must have a value of at least $50,000 and must have CEA
approval.

Complete a Purchase Request listing the items and/or system(s) with a recognizable description.
The approval will be the person having signature authorization specifically for capital equipment
in your program area. The Deliver-to field refers to the building and room where the equipment
will be delivered and used.

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