• The economic order quantity

• The economic order quantity is that quantity at which acquisition cost is equal to
Inventory carrying cost
•
•
• Spare parts which are not normally required for routine maintenance but would
ease long shut down of vital equipment or entire plant in case of non availability
are termed as insurance spares.
• The Negative Lists may consist of goods, the import or export of which is
prohibited, restricted through licensing or otherwise or canalized.
• Purchase = Closing stock + consumption – (Opening stock + Advance)
• The history card of the equipment if and when rigorously maintenance would
reflect the failure rates and outages with causes.
• Variety reduction is, therefore, a very important technique for cost reduction.
• Materials Management can be defined as the function responsible for the
coordination of Planning. Purchasing, Moving, Storing and Controlling
Materials in an optimum manner so as to provide customer service in line with
the organization goals.
• inventories comprise the largest single asset in the balance sheet of a
company accounting for 90% of the working capital
• Purchasing means procuring goods and services from outside the organization in
return for a price
• The fundamental objectives of purchasing for a manufacturing industry To
maintain continuity of supply to support the manufacturing schedule:

• There are three basic parts to a negotiation

introductory part

discussions/arguments
stating the agreement
• Successful negotiations depend to a considerable extent on advance planning
and analysis.
• Two copies of the purchase requisition may be sent to Purchase Department and
one copy each to Finance and Stores Department and of course, a copy needs to
be retained by indentor for future reference.
• The tenders collected are opened in the presence of two officials of the
Purchase Department, one official of the Finance and the authorized
representatives of the bidders who may like to be present at the time of opening
• In order to evaluate the prices of various tenders a comparative statement may
be prepared (showing the base price, excise duty, sales tax, estimated freight,
point of delivery etc)
• Purchase Committee for Purchases in which representative of Finance, Purchase
and Indenting department forms the committee
• Records Of Purchase Department :- Open Orders. Close Orders
• Vendor development is a very important function of materials management.
• Two methods of vendors rating generally used are :1. The Categorisation
method.2. The weighted point method.
• The first step in Vendor Registration would be to identify and categories the items
for the purpose of Registration