Materials: Purchasing, Reception and Storage

Flashcards generated from the lecture notes on materials purchasing, reception, and storage, focusing on key terms and definitions.

Cost Accounting

The process of determining the actual cost of a product or service, including materials, labour, and expenses.

Inventory Control

The method of ensuring that the right quantity and quality of stock is available at the right time and place.

Goods Received Note (GRN)

A document that records the details of materials received from a supplier, including description, condition, and quantities.

Materials Requisition Note (MRN)

A document that authorizes the storekeeper to release goods to a department or cost centre.

Direct Materials

Raw materials that are directly used to produce a finished product.

Indirect Materials

Consumables used in production but not directly part of the finished product, such as cleaning supplies.

Centralised Stores

A storage system where all materials are kept in one location for better control and management.

Decentralised Stores

A storage system where materials are distributed across multiple locations, usually closer to the point of use.

Economic Order Quantity (EOQ)

The optimal order quantity that minimizes total inventory costs, balancing ordering and holding costs.

Stockout Costs

Costs incurred when customer demand cannot be met due to insufficient inventory.

Bin Card

A record kept by storekeepers detailing the receipts, issues, and current balance of stock for an item.

Periodic Stock Taking

A process where all inventory items are physically counted and valued at set points in time.

Continuous Stocktaking

Counting and valuing selected items at different times throughout the year, rather than in one annual check.

Material Transfer Note

A document raised when materials are transferred from one job or cost centre to another without returning to stores.

Deterioration and Obsolescence

Costs associated with items becoming unusable over time or outdated due to changes in technology or demand.