Question

Recognizing that purchase price is but one element of the total cost picture, the scope of ____________ goes far beyond the purchase price for any given item.

a. contracting systems
b. purchase order systems
c. systems contracting
d. materials contracting

Answer 1

The correct answer is C. systems contracting

Step-by-step explanation:

The hiring of the system involves the development of a corporate agreement with a supplier to buy a large number of items or raw materials on an ongoing basis. The objective is to reduce costs and rationalize these acquisitions. These contracts can last from one to five years. The items to be purchased are usually detailed in a catalog that becomes part of the contract.

This type of contracting system generally requires close coordination between the buyer and the supplier. If done correctly, each side can substantially reduce the administrative cost. This is sometimes called "purchase without stock."