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?

    <p>To optimise the costs of holding stock and quantities required</p> Signup and view all the answers

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

    <p>A conformance specification provides specific details that the supplier should follow, while a performance specification provides guidelines of outcomes required</p> Signup and view all the answers

    What is lead time in procurement?

    <p>The duration of all internal processes plus how long the supplier will take to process the request from the buyer, produce and deliver it</p> Signup and view all the answers

    What is the whole-life costing approach in procurement?

    <p>A method that considers all costs associated with the procurement of goods or services over their whole-life</p> Signup and view all the answers

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

    <p>The importance of accounting for all costs associated with the procurement of goods or services over their whole-life</p> 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?

    <p>Raw material costs of production and labour in the provision of services</p> 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.

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