lnventory managementand procurement

Checkyourknowledge andprocurement
of keytermsin inventorymanagement bychooslngthe
bestdefinitionsfor theseterms.

Economies of scale:
a Reducing costsper unit by increasing
production
b Cuttingcostsby reducingoutput
Bufferstock:
a Goodskept in storeto coverseasonal
demande.g.Christmas sale
b Goodskept in storeto coverunforeseen
shortages in demand
or fluctuations
Factorygatepricing:
a Transportcostsare not includedin the
purchase priceofa product
b Thepriceis lowerbecause you buy directlyfromthe manufacturer

4 Supplychain:
a Thecloseco-operation of all partiesinvolvedin the making,selling,and deliveringof
a product
b Networkof storesthat supptycustomers with a widevarietyof products

5 Tender:
a An assessment or calcutation
of the approximatecostor valueof a productor service
b An offerfor goodsor servicesthat followsa for a quotationmadeby an official
request
body,e.g.localgovernment

llatch the beginningsof the sentences(r-6) with the endings(a-f) to makedefinitions of more
key terms.

r Leadtime is the time n

z Procurement
is I
3 A retaileris a business n
I Customer
ordercycletime is the time n
5 A wholesaleris T
6 JIT- just in time is a concept n
 UNIT3 Inventory and procurement
management I 21

a customers arepreparedto wait for the deliveryof theirorder.

b of reducing inventoriesby co-ordinatingthe detivery justbeforetheyareneeded.
of materiats
c it takesto produce andsupplya product.
d an intermediary betweenmanufacturers and retailerswhichbuysin largequantitiesand resells
in smallerquantities.
e thatbuysproducts fromwholesalers or manufacturers and resells
themto the uttimate
consumer.
f the purchasing of goods(materials, parts,supplies, equipment)requiredto runan enterprise.
A UDIO

fl\
{v 2 Listento an expertpresentingan inventorymanagementsystemto the managersof a large retail
7
store. Thensaywhich of the statementsare true Z or fakeE.

r Theinventory
systemis cattedCPR. I
z ll's a sales-based
system. I
3 Thesystemco-ordinates andgoodsin the togistic
the flowof information chain. u
4 hasusedthe systemfor sixyearsnow.
YoungFashion n
5 Ordersareelectronically
transferred
to the warehouse. l
6 Thestorehasreduced costsby about25 percent.
and inventory
transport n
3 Listenagainand completethe sentenceswith the wordsfrom the box.
'.. .:,r,::,..:.,:tl,,i.i.
... . .::.,:lt.r,,:ii::l:ltlli:l:a,l:::ll:.i]]t...
,stockr leadtime9.,,t...,'*trttrnment
. processin$:;1;,...f.enerateO
. Oatitinit!*gng" .
'i r:r:,:r:':r":
PointI schedule. invento'ry o retailer

7 Todayl'm goingto tellyousomething aboutCRP,thatmeanscontinuous

2 l'ltalsoexplainhow it canbe usedto lowerinventoryandoperational costsandto shorten
product
3 Firstof a1[,you decidewhatproducts youwantto orderat what Ievet.
4 Thesystemwitlusethisinformation at the of salein the retailstore.
5 The leadingRussian clothes Young Fashion introduced continuous
replenishment threeyearsago.
6 Withthe newsvstemall ordersare by computers, whichprocess data
received fromcashregisters.
Theordersaresentto the warehouse bv electronic wheretheyare
processed.
8 And finattythe goodsaredeliveredto the differentouttetsaccordingto a
9 Sincethe introduction of the CRPsystem,YoungFashionhavemanaged to cut
andtransport costsby aboutr5%.
10 Moreover. errorsin order havebeenreduced considerably by using
scanning technology andEDl.