Title of Paper : PURCHASE AND MATERIAL MANAGEMENT

Code of Paper : MBA O 106

Section - A
Q 1) What is difference between value engineering and value analysis ?
Value analysis is "A Systematic and objective evaluation of the value of a goods or
service, focusing on analysis of function relative to the cost of manufacturing or
providing the items or service".
Value engineering is "Value analysis conducted at the design engineering stage of the
product development process."
In summary value analysis refers to the analysis of an existing product, service or
administrative process while Value engineering refers to the same analysis applied to
the product ,services or administrative processes that are under design and have not
been finalized.
Q 3) What do understand by quality control ?
Quality control is a process through which a business seeks to ensure that product
quality is maintained or improved and manufacturing errors are reduced or eliminated.
Quality control requires the business to create an environment in which both
management and employees strive for perfection. This is done by training personnel,
creating benchmarks for product quality, and testing products to check for statistically
significant variations.
A major aspect of quality control is the establishment of well-defined controls. These
controls help standardize both production and reactions to quality issues. Limiting
room for error by specifying which production activities are to be completed by which
personnel reduces the chance that employees will be involved in tasks for which they
do not have adequate training.

Q4) What is investment recovery in material management ?

Investment recovery, also called asset recovery or resource recovery, is the process
of recouping the value of unused or end of life assets through effective reuse or
divestment. Organizations of all types and sizes practice some form of investment
recovery. However, larger organizations that have more equipment, operating
locations, employees, or assets often have the greatest opportunities to reap
benefits by implementing investment recovery best practices. This is because
larger companies have many more idle assets and consequently, more
opportunities to generate savings through efficient processes.
There are several important components to effective investment recovery. These
include idle asset identification, asset redeployment, and divestment. There are a
large number of other processes that fall under each of these areas. The sections
below will outline the main areas of investment recovery and will provide a brief
introduction to these areas. We will also discuss some of the benefits that can
accrue to the organization for having effective processes in place to manage these
important functions.
Q 5) What do you understand by performance management? Briefly explain
its importance
Performance management is the process of identifying, measuring, managing, and
developing the performance of the human resources in an organization. Basically
we are trying to figure out how well employees perform and then to ultimately
improve that performance level. When used correctly, performance management is
a systematic analysis and measurement of worker performance that we use to
improve performance over time.
The importance of performance management are :1.
2.
3.
4.
5.
6.
7.
8.
9.

Performance Feedback
Employee Training and Development Decisions
Validation of Selection Process
Promotions
Transfers
Layoff Decisions
Compensation Decisions
Human Resource Planning (HRP)
Career Development

Q7) What are types of store layout ? (any four)

Following are the types of store Layout found in Retailing
1. Mouse Trap Layout:
It follows a specific walking area. This layout is one of the initial layouts of retail.
This traditional format is longer in use in modern retailing.

2. Express Highway Layout:

The concept needs to be used widely as it has 50-50 positive and negative impact.
If the floor length is 2000 sq ft, put a mirror to make it appear double. If the floor
length is 10000 sq ft, it needs to be broke into halves using racks or piles of
merchandise.
3. Grid Layout:
The rows of Gondola directing towards checkout is the layout called Grid Layout.
This is commonly used in Provision and Grocery stores.
4. Block Layout:
Entire store is broke into blocks and each area is alloted to specific category of
merchandise. This layout is used in Department Store, Garments Store.
Q(8) What are differences between single sourcing and multi sourcing ?

SECTION B
Q.4. Functions of Material Management
The functions of material management have been classified into two categories as
well, namely, the primary functions and secondary functions.
Primary Functions
The primary functions of material management are required to meet the primary
objectives
Material Requirement Planning (MRP): MRP is a computer-based production
planning and inventory Control system. MRP is concerned with both production
scheduling and inventory control.

Inventory Arrangement and Control: the inventory arrangement would mean the
purchase of materials to be stored before entering the production stage or sold out,
such that the stock cost is zero.
Continual and effective flow and supply of materials: The required material by all
production center and other departments should be ensured for its continuity in flow
and supply by the material management department.
Material Quality Control: The quality of the finished products manufactured will
depend upon the quality of raw material used to manufacture those products.
System Efficiency: This function ascertains the efficiency of the system being used.
Secondary Functions
The secondary objectives can only be fulfilled through the following key secondary
functions of the materials management:
Standardization and Generalization: The design and the technical department of an
organization, which comes after the production department process, determine the
standards and specifications of different types of materials.
Product Design and Development: The product sales can be boosted with its range
and functionality. With the help of the advanced technology such as computer such as
CAD and CAM that can bring both a variety as well as flexibility to a product.
Manufacturing and Purchase Decisions: The manufacturing and purchase decisions
are a part of the managements policy decisions.
Material Coding and Classification: the material coding and classification provides
support to the production and purchasing department of an organization.
Estimation and Planning: The MRP can be implemented through accurate estimates
of sales and demand for products in the industry.

PURCHASE CYCLE?
The frequency with which an item is purchased to replace it in a companys inventory.
The frequency that a person replaces items that are purchased on a regular basis.
Below are the steps for a Standard purchasing cycle
1. Identify Need
It is at this stage that the biggest impact on cost and sustainability can be made. Staff
should consider whether the goods/services they are contemplating are genuinely
needed.
2. Develop Specification

Once the need has been established the specification must be produced.
3. Identify Suppliers
The suppliers needs to be identified who should be invited to quote/tender:
4. Tendering Process
The purchasing team will assist staff with the production of tender documentation and
will issue all tenders.
5. Evaluation of Bids
The purchasing team will support staff in the evaluation of bids.
6. Award Contract
When the evaluation is complete the contract will be awarded to the supplier that has
achieved the highest quality/price score.
7. Manage Contract
Following contract award for ongoing purchases the supplier will be monitored to
ensure that performance meets the standards required.

Q.5. Quality In The Purchasing Process

Introduction
Before any part or raw material is used in a manufacturer of a finished good that will
be delivered to a customer, it is the responsibility of the purchasing department to
ensure that the materials that arrive are of the correct quality specification.
Quality in the Purchasing Process
When the purchasing department is looking at the procurement of materials from
suppliers they will have been given some guidance by the manufacturing department,
research and development, or the quality department. This should include a variety of
information about the item to be sourced, such as

Physical Description the purchasing department must know the physical

attributes of the part they are required to source.
For example, if the required material must be made of a certain shade of a blue,
then the purchasing department must be able to communicate that requirement to
the potential suppliers to ensure that the specification can be met.
Chemical Composition The quality department should give the purchasing
team a detailed list of chemical specifications of the required material.

For example, a sourced chemical may be required to have a pH of between 5.6 and
5.9; otherwise the material would not be suitable for the manufacturing processes.
Dimensional Measurements for a part to be used in the manufacturer of a
machine the part must conform to certain dimensional specifications.
For example, if the manufacture of a finished item required the use of a Pentalobe
TS1 screw with a length of 4mm, then the supplier must be able to produce the
item in that correct size.
Performance Specifications if a part is required to withstand certain forces
or perform in a particular manner, the purchasing department must find a supplier
that can achieve those specifications.
For example, on a household item such as washing machine, the rubber belt that is
used must be bale to withstand certain forces and not fail within a certain number
of revolutions.
Industrial Standards some parts required in the production of finished goods
must conform to certain industry standards. These standards are set by a number of
trade or industry groups who try to maintain a certain level of quality.
Brand Name sometimes the quality department or development team will
inform the purchasing department to only source a particular brand name. This may
be due to the specific nature of the part made by one company or the level of
quality it has over competitors.

Q.6. warehouse management system (WMS)

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A warehouse
system (WMS) is a software application that supports the
day-to-day operations in a warehouse. WMS programs enable centralized
management of tasks such as tracking inventory levels and stock locations. WMS
systems may be standalone applications or part of an Enterprise Resource Planning
(ERP) system.
Functions of a Warehouse
1. Storage of Goods: One of the traditional requirements of a warehouse has been
for storing goods. The warehouse provides the space required for such storage and it
is one of the important functions of a warehouse.
2. Movement of Goods: Movement of goods consist of inbound activity, transfer to
storage, order selecting and outbound activity .
3. Information Management: Keeping a track of information regarding goods that
have come into the warehouse, stored and that are shipped out of the warehouse.
4. Protection of goods- A warehouse provides protection to goods from loss or
damage due to heat, dust, wind and moisture, etc. It makes special arrangements for
different products according to their nature.

5. Risk bearing Warehouses take over the risks incidental to storage of goods. Once
goods are handed over to the warehouse-keeper for storage, the responsibility of,
these goods passes on to the warehouse-keeper.
6. Financing- When goods are deposited in any Warehouse, the depositor gets a
receipt, which acts as a proof about the deposit of goods. The Warehouses can also
issue a document in favour of the owner of the goods, which is called warehousekeepers warrant. This warrant is a document of title and can be transferred by simple
endorsement and delivery.
7. Processing Certain Commodities are not consumed in the form they are
produced. Processing is required to make them consumable.
8. Grading and branding- On request warehouses also perform the functions of
grading and branding of goods on behalf of the manufacturer, wholesaler or the
importer of goods.

Q.8. Material-handling equipment

Material-handling equipment is equipment that relate to the movement, storage,
control and protection of materials, goods and products throughout the process of
manufacturing, distribution, consumption and disposal. Material handling equipment
is the mechanical equipment involved in the complete system.
Types of material-handling equipment
Storage and handling equipment
Storage and handling equipment is a category within the material-handling industry.
The equipment that falls under this description is usually non-automated storage
equipment. Products such as pallet racking, shelving, casters[2] and carts, among
others, belong to storage and handling.
Engineered systems
Engineered systems are typically custom engineered material-handling
systems. Conveyors, Handling Robots, AS/RS, AGV and most other automated
material-handling systems fall into this category. Engineered systems are often a
combination of products integrated to one system.
Industrial trucks
Industrial trucks usually refer to operator driven motorized warehouse vehicles,
powered manually, by gasoline, propane or electrically.[3] Industrial trucks assist the

material-handling system with versatility; they can go where engineered systems

cannot. Tow tractors and stock chasers are additional examples of industrial trucks.
Bulk material handling
Bulk material-handling equipment is used to move and store bulk materials such as
ore, liquids, and cereals. This equipment is often seen on farms, mines, shipyards and
refineries. This category is also explained in Bulk material handling.
On-rails transfer cart
On-rails transfer cart is a kind of material-handling equipment. It moves on the rails
and can transfer heavy cargoes or equipment with the weight 1-300t between the
workshops or warehouses in the factory.
Conveyors
Conveyors are another form of material handling. Conveyors can be used in a
multitude of ways from warehouses to airport baggage handling systems. Some types
of conveyors are unibilt, power and free, chain, towline and roller conveyor. Further
types of conveyors include belt conveyors and gravity roller conveyors .
Cantilevered crane loading platform
Cantilevered crane loading platforms are temporary platforms attached to the face of
multi-storey buildings or structures to allow materials and equipment to be directly
loaded on or shifted off floor levels by cranes during construction or demolition.