QUESTION 1

(a) In 1988, Reck and Long proposed a purchasing development framework called The four-stage purchasing development model Write the names, definitions and two characteristics of each of the 4 stages

(b) Give 5 differences between Reactive Purchasing and Proactive Purchasing

QUESTION 2

A proactive strategic procurement operation can give the organisation it represents a competitive advantage. Strategic Analysis is to do with understanding the relationship between different factors affecting the organisation and its choice of strategies. List the elements that should be taken into consideration while conducting a PEST analysis

QUESTION 3

In procurement management, manufacturing companies often have to take ‘Make-or-buy' decisions. Toshipa Company Ltd, a computer manufacturer, currently buys motherboards for its computers at Rs 2500 each. An estimate of the cost of the company to manufacture these motherboards reveals that the fixed costs will be Rs 4.8 M per year and the variable costs per motherboard will be Rs 1250. Each computer requires one motherboard and Toshipa annual capacity is 6000 computers per year. Using graph paper

(a) At what per cent of capacity does it pay the company to manufacture its own motherboards?

(b) What opportunity loss does the company make if it manufactures 5000 computers and still buys the motherboards?

(c) A new supplier has been identified selling its motherboards at Rs 2000 each. What decision should the company make and why?