Supply Chain & Materials Management: Purchasing, Vendor Selection, MRP–JIT Linkage, Logistics and Lean Supply (Basics) Questions

Question 1

Define supply chain management (SCM).

Accepted Answer

**Supply Chain Management (SCM)** is the coordination of activities and flows from suppliers to manufacturers to customers, including purchasing, production, inventory, transportation and information sharing.

Question 2

What is materials management?

Accepted Answer

**Materials management** deals with planning, sourcing, purchasing, storing and issuing materials needed for production at minimum total cost.

Question 3

State the 5R concept in purchasing (any three).

Accepted Answer

The 5R concept includes **right quality, right quantity, right time, right source, and right price** (any three).

Question 4

What is vendor rating?

Accepted Answer

**Vendor rating** is the systematic evaluation of supplier performance (quality, delivery, cost, service) using a scorecard/weighting system.

Question 5

Expand MRP.

Accepted Answer

**MRP** = **Material Requirements Planning**.

Question 6

What is logistics?

Accepted Answer

**Logistics** includes transportation, warehousing, material handling, packaging and distribution to ensure timely delivery at minimum cost.

Question 7

Explain objectives of materials management (any four).

Accepted Answer

Objectives of materials management (any four):

- ensure **continuous production** by avoiding shortages of raw materials/components.
- maintain **optimum inventory** to reduce carrying cost and avoid blocking funds.
- achieve purchasing 5R: **right quality, right quantity, right time, right source, right price**.
- reduce wastage, deterioration and **obsolescence** in stores.
- improve supplier reliability and coordination.

Thus, materials management balances availability of materials with minimum total cost.

Question 8

Explain purchasing objectives and functions (any three each).

Accepted Answer

### **Purchasing Objectives** (any three)
- procure at best value: **price + quality + delivery + service**.
- ensure continuity of supply (avoid stock-outs).
- develop and evaluate suppliers.

### **Purchasing Functions** (any three)
- process requisitions and specifications.
- identify/select suppliers and negotiate.
- place purchase orders and follow-up delivery.
- coordinate receiving/inspection and verify invoices.

Hence, purchasing is a strategic function that impacts cost, quality and delivery performance.

Question 9

Explain the purchasing procedure (steps) with a simple flowchart.

Accepted Answer

Purchasing procedure (steps):
- receive **purchase requisition**.
- check specifications/quantity and invite quotations.
- evaluate quotations and negotiate.
- place **purchase order (PO)**.
- follow-up, receive goods, inspect, and process payment.

Flowchart:

```text
Requisition → Quotations → Evaluation/Negotiation → PO → Follow-up → Receiving & Inspection → Payment & Review
```

Thus, the procedure ensures the right items are procured with proper control and documentation.

Question 10

Explain vendor selection criteria and vendor rating (any three criteria) with a small table.

Accepted Answer

### **Vendor Selection Criteria** (any three)
- **Quality**: conformance, defect rate, certifications.
- **Delivery**: lead time, on-time performance.
- **Cost**: price and total cost of ownership.
- service responsiveness, capacity and financial stability.

**Vendor rating** means scoring suppliers using weighted criteria to decide whether to continue, develop, or replace a supplier.

Table (sample):

| Criterion | What we check |
|---|---|
| **Quality** | defect rate, conformance |
| **Delivery** | on-time %, lead time |
| **Cost** | price, hidden costs |

Hence, vendor rating makes supplier selection objective and data-based.

Question 11

Explain logistics and warehousing functions (any three points) with a small table.

Accepted Answer

### **Logistics and Warehousing Functions**

**Logistics** ensures smooth movement and storage of materials and finished goods.

Functions (any three):
- **Transportation** planning to deliver on time at minimum cost.
- **Warehousing** for safe storage, identification and quick retrieval.
- **Material handling & packaging** to reduce damage and speed up movement.
- documentation and coordination with suppliers/customers.

Table:

| Function | Purpose |
|---|---|
| **Transport** | timely movement |
| **Warehouse** | safe storage & retrieval |
| **Handling/packaging** | reduce damage & delays |

Thus, efficient logistics reduces lead time and improves delivery reliability.

Question 12

Explain lean supply chain concept and list any three types of waste it reduces.

Accepted Answer

### **Lean Supply Chain Concept**

A **lean supply chain** aims to deliver value to the customer by eliminating **waste (non‑value‑added activities)** across the end-to-end flow.

Wastes reduced (any three):
- **excess inventory** (extra carrying cost)
- **waiting time** (delays due to poor coordination)
- **unnecessary transportation** and handling
- **defects/rework** in supply and production

Hence, lean supply improves flow, reduces cost, and supports faster response with reliable suppliers and better information sharing.

Question 13

Explain MRP: concept, inputs and outputs (exam-style) with a table.

Accepted Answer

### **MRP (Material Requirements Planning) — Exam-Style**

**Concept:** **MRP** is a planning system that determines **what materials are required, how much, and when**, based on the master production schedule. It is best suited for **dependent-demand** items (components and subassemblies).

#### **Inputs of MRP**
- **Master Production Schedule (MPS)**: what finished goods to produce and when.
- **Bill of Materials (BOM)**: product structure and quantity of components.
- **Inventory records**: on-hand stock, scheduled receipts, lead times.

#### **Outputs of MRP**
- planned order releases and receipts
- purchase orders and work orders
- rescheduling notices (expedite/postpone)

Table:

| **MRP Inputs** | **MRP Outputs** |
|---|---|
| MPS, BOM, inventory status | planned orders, purchase/work orders, rescheduling |

**Conclusion:** MRP improves material availability and reduces shortages by converting the production plan into time-phased material plans.

Question 14

Differentiate MRP and JIT and explain how they can be used together (exam-style with a comparison table).

Accepted Answer

### **MRP vs JIT and Their Linkage — Exam-Style**

#### **Differences**
- **MRP** is generally **push-based**: it releases orders based on the planned schedule.
- **JIT** is **pull-based**: replenishment happens based on actual consumption.

Comparison table:

| Basis | **MRP** | **JIT** |
|---|---|---|
| Approach | **push** planning | **pull** execution |
| Requirement | accurate BOM/lead time data | stable flow, reliable suppliers |
| Focus | planning & time-phasing | waste reduction & quick response |

#### **How to use together (linkage)**
- use **MRP** for medium/long-term planning and procurement (what to buy and when).
- use **JIT/kanban** for shop-floor execution and short-term control (how to replenish quickly).

Flow:

```text
MRP plan (what/when) → procurement & capacity planning → JIT execution (pull) → reduced inventory + better flow
```

**Conclusion:** Combining MRP and JIT gives both good planning discipline and lean execution, improving availability and reducing excess inventory.

Question 15

Explain make-or-buy decision and the factors considered (exam-style) with a table.

Accepted Answer

### **Make-or-Buy Decision — Exam-Style**

**Meaning:** Make-or-buy is a decision whether to **manufacture a component in-house** or **purchase it from an outside supplier**.

#### **Factors considered**
- **Cost**: compare variable and fixed costs; consider total cost of ownership.
- **Capacity**: availability of machines, manpower and time.
- **Quality**: ability to meet specifications and control quality.
- **Confidentiality/technology**: strategic importance and IP.
- **Supplier risk**: delivery reliability, lead time and continuity.

Table:

| Factor | Make (in-house) | Buy (outsourcing) |
|---|---|---|
| Cost | may be lower at high volume | can be lower without fixed cost |
| Control | high control on quality/lead time | depends on supplier |
| Risk | capacity risk | supplier risk |

**Conclusion:** The best decision is the one that meets quality and delivery needs at minimum total cost with acceptable risk.

Supply Chain & Materials Management: Purchasing, Vendor Selection, MRP–JIT Linkage, Logistics and Lean Supply (Basics)

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