The 5 Rights of Purchasing

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Questions and Answers

What are the 5 Rs of procurement?

Right quantity, right quality, right place, right price, right time (correct)
Right quantity, right quality, right price, right time, right product
Right quantity, right quality, right place, right price, right person
Right quality, right place, right price, right time, right person

What is the difference between a conformance and a performance specification?

A conformance specification outlines outcomes required, while a performance specification provides specific details that the supplier should follow (correct)
A conformance specification is used when a supplier is required to provide expertise in fulfilling the requirement, while a performance specification provides technical drawings
A conformance specification provides specific details that the supplier should follow, while a performance specification outlines outcomes required
A conformance specification provides a chemical formula, while a performance specification provides brand names

What is lead time in procurement?

The time taken by the buyer to submit a requisition to procurement
The time taken by the supplier to process the purchase order
The time taken by the buyer to process the request from the supplier
The time taken by the supplier to deliver goods or perform services (correct)

What is the purpose of an Economic Order Quantity (EOQ) system in procurement?

To optimise the costs of holding stock and quantities required (C) Signup and view all the answers

What is the difference between a conformance and a performance specification?

A conformance specification provides specific details that the supplier should follow, while a performance specification provides guidelines of outcomes required (B) Signup and view all the answers

What is lead time in procurement?

The duration of all internal processes plus how long the supplier will take to process the request from the buyer, produce and deliver it (A) Signup and view all the answers

What is the whole-life costing approach in procurement?

A method that considers all costs associated with the procurement of goods or services over their whole-life (D) Signup and view all the answers

What does the concept of whole-life costing emphasise in procurement?

The importance of accounting for all costs associated with the procurement of goods or services over their whole-life (C) Signup and view all the answers

What are some of the hidden costs that may be considered in a whole-life cost assessment in procurement?

Raw material costs of production and labour in the provision of services (A) Signup and view all the answers

Study Notes

Procurement Fundamentals

The 5 Rs of procurement are: Right Quality, Right Quantity, Right Source, Right Time, and Right Price

Specification Types

A conformance specification outlines the required characteristics of a product or service to meet a specific standard or requirement
A performance specification outlines the expected results or outcomes of a product or service

Lead Time

Lead time in procurement refers to the time between placing an order and receiving the goods or services

Economic Order Quantity (EOQ)

An EOQ system in procurement determines the optimal quantity of inventory to order and hold to minimize costs
The purpose of EOQ is to balance holding costs (storage, maintenance, etc.) with ordering costs (ordering, transportation, etc.)

Whole-Life Costing

The whole-life costing approach in procurement considers all costs associated with a product or service throughout its entire lifecycle
Whole-life costing emphasizes the importance of considering all costs, not just the initial purchase price, when making procurement decisions
Hidden costs that may be considered in a whole-life cost assessment include:
- Maintenance and repair costs
- Energy and utility costs
- Disposal and recycling costs
- Training and support costs

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Description

"Master the Art of Procurement: Test Your Knowledge on the 5 Rights of Purchasing!" Take this quiz to improve your understanding of the 5 key elements to consider when making a purchase - quantity, quality, place, price, and time. Challenge yourself and see how well you can apply these principles in your procurement decisions. Perfect for procurement professionals and anyone interested in purchasing strategies.