Chapter 5

Chapter 5 & 6

Q1: Define "direct materials" and "indirect materials". List reasons for a large company having two separate departments to manage the purchasing of each.

Q2: In about 200 words, describe the reasons a buyer might have for wanting to participate in an industry consortium marketplace instead of setting up its own private company marketplace.

 Q3: Which industries were the first to establish standard RFID technology? In about 100 words, state why, in your opinion, these industries were more interested in RFID tag technology than other industries.

A n s w e r s.

1. Direct materials are those materials which can be identified in the product and can be conveniently measured and directly charged to the product. Example timber in furniture making, cloth in dress making, bricks in building a house. Indirect materials are materials that are used in a production process, but are not directly traceable to a cost object. Example Lubricants,grease,sand paper. The large companies used to have the separate departments for the direct and indirect material because large companies used to have much amount of direct material and indirect material on daily basis so it is very impossible for one department to carry out functions on the two. For the companies success they must need to have online and manual databases, so it is very important to have two different departments for these two materials to maintain proper cash books, receiving books etc.

2.  A buyer want to participate in an industry consortium market instead of setting up its own private company marketplace because an industry consortium is a greater way to gain competitive advantage. They feel that things will be cheaper than purchasing them individually. When buyers participate in a consortium, they will also have least work to do. The most important reason for participating in a consortium marketplace is because there comes more ideas with me people and the better off that particular marketplace will be. The process of setting up your own private company marketplace can be very expensive and it takes a lot of work. Some people have no idea where to start when setting up their own private company marketplace. Therefore, joining an industry consortium marketplace would be a lot easier and cheaper. 

3.  Guangdong RFID Technology Service Center (GDRC for short) is a public service organization initiated by the Guangdong Radio Monitoring Center and Logistic & IT Associates, under the supervision of Department of Information Industry(DII) of Guangdong, in cooperation with RFID organizations, research institutions and industrial organizations of both Guangdong-Hong Kong and abroad, to provide localized technical support on shared RFID infrastructure for the region as well as commercialization of RFID application in logistics, manufacturing, retailing and IT industry. Missions of GDRC To promote local applications of RFID technology complied with international standards and to provide Guangdong with international logistic supply chain services, to enhance the competitiveness for local industries. RFID tags can easily track moving objects and send the required information back to the reader. This eliminates human errors, reduces labor and provides quick access to a wealth of information.  RFID costs more to implement than a barcode system, but provides a good return on investment in the long run, since RFID is significantly more efficient. An RFID tag is securely placed within an object or embedded in plastic, enabling the system to be used in a variety of harsh environments, such as areas of high temperature or moisture, or with exposure to chemicals or the outdoors. An RFID tag can be read through other materials (though some materials may cause problems). Once again, cost comes into play here, as read-only tags are much less expensive than read/write tags. Therefore, you will likely see limited use of this functionality.