Exam 13: Purchasing, Inventory, and Quality Control

Explain why only one person should be assigned the responsibility of purchasing.

Receiving the ordered goods and placing them in inventory are the last steps in the purchasing procedure.

Suppliers should be chosen to meet carefully set quality and service standards.

Small businesses should never subcontract production to deal with seasonal variations in demand.

Supplier-base downsizing means reducing the number of suppliers to concentrate purchasing.

The reason for carrying inventory is to disconnect one segment of the operating process from another so each part can operate at its optimum level.

Standing orders simplify the purchasing procedure and allow for long-range planning.

_____ is the process of coordinating the movement, storage, and all processes from beginning to end.

The Federal Acquisition Streamlining Act prohibits government agencies from purchasing off-the-shelf items.

_____ is an integrated-coordinated system of activities to transform raw materials into finished products delivered to the end consumer.

Close coordination between the owner and the supplier can improve efficiency by shifting inventory costs to the distributors.

When inventory level determines the time to order, the order quantity is a fixed amount called the _____.

Most small businesses are successful in purchasing when they use a single source of supply.

Which of the following is true of assigning responsibility for purchasing?

There is no way to avoid carrying inventory, so the best an owner can do is manage its movement and control its costs.

What is the advantage of using multiple sources of supply?

The ideal inventory level exists when items arrive just in time for sale to customers.

Summarize the costs of carrying inventory.

_____ are sales lost because an item is not available in store when customers want it.

_____ is setting the times and sequences needed to perform specialized activities.