Check your knowledge of key terms in inventory management and procurement by chooslng the
best definitions for these terms.
Economies of scale:
a Reducing costs per unit by increasing
production
b Cutting costs by reducing output
Buffer stock:
a Goods kept in store to cover seasonal
demand e.g. Christmas sale
b Goods kept in store to cover unforeseen
shortages or fluctuations in demand
Factory gate pricing:
a Transport costs are not included in the
purchase price ofa product
b The price is lower because you buy directly from the manufacturer
4 Supply chain:
a The close co-operation of all parties involved in the making, selling, and delivering of
a product
b Network of stores that suppty customers with a wide variety of products
5 Tender:
a An assessment or calcutation of the approximate cost or value of a product or service
b An offer for goods or services that follows a request for a quotation made by an official
body, e.g. local government

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