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METHOD OF PURCHASING, The formal process of buying goods and services.,…
METHOD OF PURCHASING
Ordering needed food and supplies from the list of vendors based on daily, weekly, or monthly price quotations.
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- Prices are based on a set specification furnished to interested vendors
- The buyer may request daily prices for fresh fruits and vegetables but may use a monthly quotation list for grocery items.
- The order is placed after consideration of price in relation to quality, delivery,and other services offered.
Contact between the buyer and vendor is made by fax, computer, telephone, or through sales representatives who call on the buyer
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COST PLUS PRICING
Positive - Assured contract profits. Justifiable. Simple Negative - Ignore cost change, Ignores Competition
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Definition-Cost plus pricing involves adding a markup to the cost of goods and services to arrive at a selling price. Under this approach, you add together the direct material cost, direct labor cost, and overhead costs for a product, and add to it a markup percentage in order to derive the price of the product.
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3) blanket - an agreement on specific terms and conditions: date and quantity and amount are not specified.
Usually based on informal agreements that often involve oral negotiations. the transactions are usually completed on the phone.
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