Small Business Management

Business

Quiz 13 :

Purchasing, Inventory, and Quality Control

Quiz 13 :

Purchasing, Inventory, and Quality Control

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Would you buy the product from your competitor to meet the contract Explain.
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The case highlights the unusual situations which entrepreneurs come across while handling their relationships with their clients. These situations should not be solved in a panicking way. The proper solutions require cool and composed mind-set which can help in the right decision-making.
Buying products from the competitor to meet the contract is not a bad option. For the current big order which the Company E has received from its biggest client, buying and reselling is the best possible option available. Just for one big contract Company E can't take the risk of increasing its fixed expenses to increase its production capacity. It is no way practical to raise the company's break-even point to meet the current order. Although buying from the competitor and reselling the same to the client company will be a deal of no profit and no loss, it will save its relationship with its biggest client company. In businesses, relationships are the most important assets.
It can be concluded that many times, the business owners face dilemma where it seems quite hard and complicated to arrive at a conclusion. During those times, the entrepreneurs should use their critical thinking and decision-making skills to find out the best solution for the existing problem. Sometimes earning profit is not the only option; there are more valuable things which are important for the smooth functioning of a business. In this case, the valuable thing is the relationship which Company E shares with the client company.

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Discuss the advantages and disadvantages of buying locally versus buying from a distant seller.
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Buyers have lots of options to buy products of their choice. They plan their time, budget, transport, and accessibility to go and purchase the required products. Each buyer has his/her own preferences. Some prefer to buy from local vendors and some prefer to buy from distant vendors.
Advantages of buying locally over buying from a distant seller are as follows:
• Buying local products is accessible and easy whereas buying products from a distant seller takes whole day.
• One can buy fresh products especially while buying perishable ones. Buying these products from a distant seller spoils the texture.
• Buying locally saves money as it requires less transportation cost whereas buying from a distant seller requires good transportation facilities which charge high.
• Emergency buying can be done in a feasible manner from a local store whereas this facility is not available if customers choose to go to a distant seller.
• Buying local saves time whereas buying from a distant seller needs a proper time-schedule to go and purchase the required products.
• Easy returns and exchanges are possible whereas it is a bit difficult to go to the distant seller for the same.
Disadvantages of buying locally over distant seller are as follows:
• Variety, unique and differentiated products can be purchase while visiting a distant seller whereas local sellers have limited options.
• The products will cost comparatively low in distant market whereas it remains high in local market.
• Buying from a distant seller makes the customer known about availability of products in other areas where as buying locally makes people confined to a limited known area.
It can be said that it is customers' choice what they feel convenient. Many times it depends upon their interests as well. They wish to go to distant sellers to explore the products which they don't get nearby. Some people are so busy in their work-life balance that they never prefer to go to faraway places for buying.

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What effect on your company would the delivery of an increased percentage of defective parts have What would you do about this
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Quality of the products is based upon all its constituent parts. All the parts should be in a proper working condition so that the finished product can meet the quality standards. Compromise of any sort leads the companies into big trouble.
The increased numbers of defective products supplied by a firm will double the work of the company employees. If these defective parts are used in manufacturing the products, the quality of the finished product will be spoiled thereby spoiling the company's image in the market. The company's sales will witness a downfall. Market trends will go against the company and the performance indicators will start anticipating the company's standards to be low.
Delivery of increased number of defective parts reflects the careless attitude of the supplier. If it happens once in a while, it can be considered as mistake which any one can make; but if the same process repeats several times, the supplier should be contacted to talk about the quality standards. Still if the supplier does not understand, the case should be forwarded to ISO. It is an organization which provides international standards certification to the products if the products met its quality standards. The products which are underrated by this organization observe a steep downfall.
It can be concluded that solution of all the issues related to quality of products are available. The need of the hour is to use these sources in times of emergency. Business is launched by investing the entire savings of persons; each and every corrective measure should be taken to continue the smooth functioning of the same.

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Many times, sales personnel do not practice good selling relations. How would you control the quality of this type of service
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Would you add the additional capacity Explain.
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What would you do if you faced the same situation
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A company orders widgets in batches such as 1,000 units. The company uses a constant number each month (say 2,000) in production. Show how the inventory level changes over time between orders. What factors would cause you to change the order size up or down
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What are the advantages and disadvantages of shopping at a single store rather than at several
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In Figure 13.2 styles are changed twice a year. What changes would be required with seasonal changes of four or more styles
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Outline instructions for installing a new quality circle.
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What is quality How can it be measured How can it be controlled
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In some parts of the country, building construction varies seasonally. Is this a problem for company management What decisions must management make concerning these variations
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How would you make an economic study to determine the quantity of a food item to buy for your family on each trip to the store How often should purchases be made
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What options are available to the company
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What would you do if you received a large number of customer response forms with comments similar to those in Figure 13.7
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