Purchasing and supply

Buffer stock:

• Goods kept in store to cover seasonal
  demand e.g. Christmas sale
• b Goods kept in store to cover unforeseen
  shortages or fluctuations in demand

The purchasing process begins when the end user first identifies and communicates a __________.

• vision
• need
• goal
• requirement

Which of the following statements  is true of just-in-time (JIT) purchasing?

• In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.
• ) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.
• In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.
• Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

The purchase-order lead time is the ________.

• time between placing an order and its delivery
• time between receiving a customer order and producing the products 
• ) time between receiving a customer order and delivering the items 
• time required to correct errors in the defective products 

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory is a(n) ________.

• purchasing cost 
• ordering cost
• stockout cost
• carrying cost

Among different types of costs associated with inventory, the costs of obtaining purchase approvals are ________.

• purchasing costs
• ordering costs 
• stockout costs 
• carrying costs

Number of times inventory is sold and replaced in a given period

• inventory turnover

• stock exchange

• buyer

• UPC

The first step in the stock handling process

• receiving

• transferring

• marking

• checking

Employees count stock when using a physical inventory system.

• True

• False

The perpetual inventory helps businesses track items in inventory on a constant basis.

• True

• False