Answer to Question #254643 in Management for Amantle

Question

Create your own practical example (narrative) explaining the following types of purchases:

• Raw materials.

• Semi-finished products and components.

• Production support items.

• Services.

• Capital equipment.

Answer 1

1. Raw Materials - Items with a lack of processing by the supplier into a newly formed product. Often these raw materials are not of equal quality and are purchased by grade. Example is coal and petroleum.
2. Semi-finished products and components - Items purchased from a supplier required to support an organization’s final that are production eg subassemblies, assemblies, subsystems, and systems
3. Production support items - Materials required for packaging and shipping eg bags, shrink-wraps and tape.
4. Services are required to support the facility or the business eg customer support, temporary labor and facilities.
5. Capital equipment are assets intended to be used for more than one year eg machinery and computer systems .