L4M7 Exam Dumps : Whole Life Asset Management

Explanation

The costs of stockouts - the costs of being out of inventory - include:

- Loss of production output

- Costs of idle time and of fixed overheads spread over a reduced level of output

- Costs of any action taken to deal with the stockout, such as buying from another stockist at an enhanced price, switching production, obtaining substitute materials

- Loss of customer goodwill due to the inability to supply or late delivery.

(Procurement and Supply Chain management - 9th Edition, K. Lysons and B. Farrington, 2016)

LO 2, AC 2.2

Explanation

There are several methods to reduce the acquisition costs in procurement. L4M7 study guide lists the following methods:

- Buyer discretionary spend

- 'User buying'

- Vendor managed inventory (VMI)

- Two-bin Kanban

- Product catalogue

- e-Procurement techniques, including some systems such as ERP, procure-to-pay (P2P), e-requisition, e-tendering, etc.

- Procurement cards