The following factors contribute to purchase control:
i) Determination of Quantity to be purchased
Quantities purchased in excessive number or weight block the working capital and the quantities purchased below the reasonable limit endanger the continuous working of the factory.
ii) Determination of the Ordering Point
The ordering point of the ordering level is one at which the order for purchase of materials is to be placed with the suppliers when the stock of that material is reduced to that point by consumption or otherwise.
iii) Determination of Price at which to be purchased
The selection of right suppliers and the best terms available out of the quotations received helps this factor.
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