Explain why only one person should be assigned the responsibility of purchasing.
What will be an ideal response?
While capable subordinates, such as specialty buyers, may be delegated the authority to order in their areas of expertise, in general one person should be given the overall purchasing responsibility. But that person should ask for-and get-the help of people knowledgeable in areas such as engineering and planning.
Those doing the purchasing should be aware of trends and special situations that can affect operations and should call situations such as the following to their attention:
1. Expected changes in price: Buying later for expected decreases in price or buying increased quantities for expected inflation in price can result in savings. However, stockouts, which are sales lost because an item is not in stock when customers want it, and inventory costs that are too heavy should be guarded against.
2. Expected changes in demand: Seasonal products and high-fashion items fall into this category.
3. Orders for specialty goods: The quantity ordered should match expected demand, so no material is left over.
4. Short supply of materials
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Journalize the first yearly payment on December 31, 2019. Omit explanation.