Page 60 - DMGT525_MATERIALS_MANAGEMENT

Unit 4: Purchasing Management

Invoice: Invoice is an itemized statement of money owed for goods shipped or services rendered. Notes
Lead Time: Lead time is the time interval between the initiation and the completion of a production
process.

Purchase Department: The purchasing department is responsible for acquiring the inventory
that a company sells.
Purchase Indents: It is an internal company document used in the purchasing process to authorize
the requisition of materials prior to initiating a purchase order.
Purchasing Management: Purchasing management directs the flow of goods and services in a
company and handles all data relating to contact with suppliers.
Purchasing: The acquisition of something for payment is known as purchasing.
Quality of Conformance: It is the degree to which a product or service meets or exceeds its
design specifications and is free of defects or other problems that mar its appearance or degrade
its performance.
Reorder Level: The point at which the buying department places its order for replacement
materials is known as reorder level.
Scientific Purchasing: Scientific purchasing is the technique of purchasing goods of right quality,
in the right quantities, at the right price, at the right time and from the right source.
Stock on Pipeline: Goods that have left a firm’s warehouse(s) but have not been bought by the
ultimate consumers, customers, or users, and are therefore still within the firm’s distribution
chain are known as stock on pipeline or pipeline stock.
Two-bin System: Two bin system is a replenishment system where parts are pulled from one bin
only after a second bin has been emptied; the empty bin is the signal to have it refilled.

4.10 Review Questions

1. What do you understand by purchasing management? How is it important in materials
management?

2. Explain the objectives of scientific purchasing.
3. Write a short note on the functions of purchase department.
4. Briefly discuss on the responsibilities of the purchase department.

5. Elaborate on the duties of the purchase department.
6. Explain the 8 Rs of purchasing with the help of a suitable diagram.
7. What do you understand by Kardex system? Why is it used?
8. Explain the fundamental principles of public buying.
9. How has e-procurement changed the current scenario of purchase management?

10. Discuss the procedure in the purchase of high capital goods.

Answers: Self Assessment

1. Purchasing 2. Production
3. Purchase Manager 4. Minimum

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