Materials Management-2


SKU: AMSEQ-184 Category:

Assignment – A

1.(a) Define Integrated materials management. What is the need for integrated materials management?
(b) What are the advantages of integrated materials management?

2. Explain the materials management organization in your company. What are the advantages?

3.(a) What are various models of material codifications?
(b) How codification leads to standardization? What are the benefits of standardization?

4.(a) What are 5Rs of purchasing?
(b) What is vendor evaluation? Explain Approved Vendor list.

5.(a) Explain a purchase cycle.
(b) How capital purchase is different from normal purchases?
(c) What are the various payment terms for international purchasing? Explain the essential features of letters of credit.

Assignment – B

1.(a) What are the elements of a contract?
(b) What are the functions of a store?

2.(a) What is meant by stock accounting? What are the various methods of stock valuation?
(b) What are the principles of materials handling?

3.(a) What is EOQ? Derive the EOQ formula. What are the underlying assumptions?
(b) Explain the inventory replenishment systems.

Case Study

Vendor’s Dilemma

(a) An item purchased from a vendor costs Rs 20 each and the annual demand for the item is 1000 units. If it costs Rs 5 every time an order is placed and carrying cost is Rs 4 per unit per year. What is the quantity to be ordered so that the total cost is the minimum? If the supplier offers a discount of 5% for an order quantity of 100, should the company accept the offer?

(b) Perform an ABC analysis on the following data and categorize these items in three categories.

Item Annual consumption in units Rate per unit
A 7000 5.00
B 24000 3.00
C 1500 10.00
D 600 22.00
E 38000 3.00
F 40000 5.00
G 60000 2.00
H 3000 13.00
I 300 8.00
J 29000 4.00
K 11500 7.00
L 4100 6.00

(c) Show the categories in a graph.

Assignment – C

1. The latest thinking in the case of purchase function indicates that it is a
(a) Service function
(b) Profit Centre
(c) Independent function
(d) Complex function

2. Approved vendor list means
(a) List of vendors approved by DGS&D
(b) List of vendors approved by the Customer
(c) List of vendors approved by the organization itself
(d) None of the above

3. The simplest method of specifying a product while purchasing is
(a) Brand
(b) Samples
(c) Drawings
(d) ISI specification

4. Right quality means
(a) That suits the purpose
(b) Tighter tolerances
(c) Quality as desired by the design engineer
(d) Quality as decided by the QC department

5. The main objective of purchasing is
(a) To secure best value for money
(b) To purchase at least price
(c) To purchase at right time
(d) To purchase in right quantity

6. Sales tax is payable on
(a) Basic price
(b) Basic price plus excise duty
(c) Basic price minus excise duty
(d) Only on excise duty

7. Vendor rating is done by
(a) Awarding the highest grade to the lowest bidder
(b) Evaluating the vendor’s performance on the basis of weightages given to Delivery, Price, Quality and other parameters appropriate at a particular point of time
(c) Visiting the vendor’s manufacturing facilities, interviewing vendor’s production and quality people, examining their cost and finally choosing the vendor.
(d) Doing all the above three tasks.

8. Return on investment can always be increased by
(a) Increasing sales
(b) Increasing profit
(c) By improving the productivity of the capital employed
(d) By increasing the capital employed

9. Which of the following is a stock verification method
(a) FIFO
(b) LIFO
(c) Perpetual
(d) HIFO

10. Which of the following is not true for Air Way Bill
(a) Receipt of goods
(b) Contract for affreightment
(c) Negotiable document
(d) Issued by carrier

11. Which of the following is not a carrier selection determinant?
a.)Transportation cost
(b) Transit time
(c) Reliability
(d) Vehicle cost

12. Effective space utilization in warehouse means:
(a) Effective use of floor space in a store/warehouse
(b) Usage of gangways/aisles for storage of material
(c) Use of racks in a storehouse
(d) Effective use of cubic space

13. Stock becomes surplus NOT due to:
(a) Faulty planning
(b) Faulty purchasing
(c) Faulty timing of receipt of material
(d) Not issued for quite sometime

14. A bonded warehouse is:
(a) An open stockyard with high walls and other security measures for extra protection of goods stored
(b) A warehouse in the premises of airport where goods imported by air are kept
(c) A warehouse where goods on which customs or excise duties have not been paid are kept
(d) A government warehouse used for storing confiscated goods

15. Warehouse layout essentially and primarily depends on:
(a) Space available
(b) Statutory requirements
(c) Product and volumes
(d) Equipments available

16. Security in a warehouse means:
(a) Obtaining security deposit from stores personnel against any loss caused by them due to negligence in their work
(b) Same as Safety
(c) Ensuring that materials are not stolen
(d) Ensuring that stores personnel do their work in such a way as to prevent accidents

17. Value analysis is a tool used for
(a) Cost reduction
(b) Benchmarking
(c) Reengineering
(d) Gap analysis

18. EMD is
(a) To be returned after opening of price bids
(b) To be returned to unsuccessful bidders after award of contract
(c) Not to be returned
(d) Depends on discretion of purchaser

19. Which of the following is essential for a contract?
(a) Partnership firm
(b) Company is registered under Company’s act
(c) Lawful object and lawful consideration
(d) Liquidated damages

20. Liquidated damages
(a) Can be claimed even if no supplies are made
(b) Is a pre-estimated amount between the parties for delay in performance of the contracts
(c) Is the same as general damages
(d) Can be claimed in addition to risk purchase loss in case of cancellation of contract after original delivery period

21. Reasonableness of prices is NOT ascertained by
(a) Looking at Last Purchase Price
(b) Independent cost estimates
(c) Looking at the number of competitive offers received
(d) Supplier’s statement that he is a supplier for 10 years and has quoted most reasonable prices.

22. Principles of ethics for buyer does NOT include
(a) Buying without prejudice
(b) Working with honesty
(c) Developing undue friendship with suppliers
(d) Consider the interest of the organization

23. Vendor rating is carried out
(a) To get materials in time
(b) To get best quality materials
(c) To get large discount on quantities
(d) To know the overall performance of the supplier

24. A purchase requisition is
(a) A document for record
(b) Authorization for purchase activities
(c) Written information on materials
(d) Issued on suppliers by purchase organization

25. Inventory analysis based on frequency of issue is called
(a) ABC analysis
(b) FSN analysis
(c) VED analysis
(d) XYZ analysis

26. Green Purchasing relates to the purchase of
(a) Ergonomic products
(b) Eco friendly products
(c) Fresh products
(d) Value added products

27. Stock Keeping Unit (SKU) means
a.)Specific part or product identification number
b.)Part or product in a stock keeping location
(c) Group of similar parts or products
d)Parts or products in transit

28. Successful negotiations are always a result of
(a) Arguments
(b) Skill of the buyer
(c) Skill of the seller
(d) Understanding and appreciation of each other’s position

29. The most compelling reason for making an item in house is
(a) Supplier’s monopoly
(b) Secrecy of the manufacturing process
(c) High cost of buying
(d) Distance of the buyer

30. A Purchase order is a contract in law, because it satisfies that
(a) It is signed by the purchaser
(b) It is signed by both purchaser and seller
(c) It consists of an offer and acceptance
(d) It involves payment to supplier

31. While calculating EOQ which of the following is NOT taken into account
(a) Purchasing cost
(b) Inventory carrying cost
(c) Unit price
(d) Marketing expenses

32. The LEAST important criteria for selecting a firm as a vendor is
(a) ISO certification
(b) Financial capability
(c) Technical capability
(d) Owner’s educational qualifications

33. The best way to handle gas cylinder is to
(a) Roll over their side
(b) Drag them
(c) Lift and carry them
(d) Roll on the bottom edge

34. An example of light commercial vehicle is
(a) DCM Toyota truck
(b) Mahindra Jeep
(c) TELCO passenger
(d) Bajaj Tempo

35. LCL stands for
(a) Less than normal Cargo Load
(b) Less than Container Load
(c) Low Cargo Load
(d) Less Costlier Load

36. Economic Order Quantity is
(a) The quantity ordered for the maximum discount
(b)The smallest quantity ordered that can be accommodated in the warehouse
(c) The quantity which balances the ordering costs and inventory carrying costs
(d) The quantity for which the supplier gives the best credit terms

37. Rail transport is economical compared to road transport for the transportation of
(a) Large volume of goods over long distances
(b) Bulky goods over short distances
(c) Smaller volume of goods over short distance
(d) Fragile goods over long distances

38. Which of the following is NOT a content of purchase manual?
(a) Organization structure
(b) Company policy
(c) Formats for RFQ, PO, etc
(d) Salary of purchase assistants

39. Recognizing materials by number in place of description is called
(a) Specification
(b) Codification
(c) Requisition number
(d) Control number

40. The term Ex-Works directly affects which of the following
(a) The costs of the goods being sold
(b) The terms of payment
(c) The quality of the goods being sold
(d) The quantity of the goods being sold