Question

The first activity of purchasing cycle of material requirement planning is

• A. Communicating requirement to the purchase
• B. Source Selection and development
• C. Recognizing the need for procurement
• D. Inspection of goods

Hint:

The purchasing cycle always begins with the identification of a need. Whether it's driven by a production schedule (as in MRP), inventory levels, or a departmental request, 'recognizing the need' is the foundational first step before any formal communication, sourcing, or ordering can take place.

Answer 1

The Correct Option is C

Step 1: Understand the purchasing cycle in the context of Material Requirements Planning (MRP).
The purchasing cycle is a series of steps involved in acquiring materials, goods, and services. In an MRP system, the need for materials is determined by the production plan and inventory levels.
Step 2: Sequence the typical activities in a purchasing cycle.
A standard purchasing cycle typically follows these steps: 

• Recognizing the need for procurement: This is the initial trigger. It could come from an MRP system flagging low inventory, a production order requiring specific materials, or a department needing a particular service. This is the very first step, identifying that something needs to be purchased.
• Communicating requirements to the purchase/Purchase Requisition: Once the need is recognized, a formal requisition is created and sent to the purchasing department.
• Source Selection and Development/Supplier Selection: Identifying potential suppliers and evaluating them based on criteria like price, quality, delivery, and reliability.
• Purchase Order Issuance: Placing a formal order with the selected supplier.
• Order Monitoring/Expediting: Tracking the order to ensure on-time delivery.
• Receiving Goods: Physical receipt of the ordered items.
• Inspection of Goods: Checking the received goods for quality, quantity, and compliance with specifications.
• Invoice Approval and Payment: Processing the supplier's invoice for payment.
  Step 3: Identify the first activity among the given options.
  Among the given options: 
  (1) Communicating requirement to the purchase: This happens after the need is recognized, via a purchase requisition. 
  (2) Source Selection and development: This occurs after the requirement is communicated and a decision to purchase is made. 
  (3) Recognizing the need for procurement: This is the fundamental starting point. Without identifying a need, no further purchasing activities would occur. 
  (4) Inspection of goods: This is one of the final steps after the goods have been received. 
  The final answer is $\boxed{\text{3}}$.