---
title: "Purchasing and functions of purchasing department"
subject: "Organization and Management"
chapter: 6
key: "semester_7/organization_and_management:purchasing-functions"
source: https://www.bctengineer.com/q/semester_7/organization_and_management/purchasing-functions
site: BCT Engineering
---

# Purchasing and functions of purchasing department

Organization and Management · Chapter 6: Purchasing and Marketing Management

- Asked in: 2072 Kartik; 2070 Asar, 3+5 marks; 2070 Chaitra, 5 marks; year not given (asked 3 times)
- Video: [Purchasing | Procurement role | Purchase Department | Functions | Industrial Management Basics](https://www.youtube.com/watch?v=bDnXvYcN9F8) — Upendrakumar malla
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/organization_and_management/purchasing-functions
- Whole chapter: https://www.bctengineer.com/md/semester_7/organization_and_management/chapter-6

## Question

Define purchasing. Explain the different functions of the purchasing department.

## Short answer

Purchasing is the function of obtaining materials and services at the right quality, quantity, price, from the right source at the right time. The department processes requisitions, selects suppliers, invites tenders/quotes, negotiates, issues orders, follows up, inspects receipts, verifies invoices, maintains records, coordinates inventory, and conducts market research.

## Answer

#### Purchasing
Purchasing is the function of obtaining the materials, equipment, supplies and services required by an organization in the right quality, right quantity, at the right price, from the right source and at the right time (the "five rights"). In the Government of Nepal, purchasing follows the Public Procurement Act, 2063.

#### Functions of purchasing department
1. **Receiving and analysing purchase requisitions:** Check what, how much and when the user department needs.
2. **Selecting sources of supply:** Find reliable suppliers, maintain a supplier list and evaluate them.
3. **Inviting quotations/tenders:** Call for bids (bolpatra for public bodies), compare price, quality and delivery.
4. **Negotiating price and terms:** Settle payment, discount, delivery and warranty.
5. **Placing purchase orders:** Issue a formal order and contract.
6. **Follow-up and expediting:** Ensure on-time delivery.
7. **Receiving and inspection:** Check quantity and quality with the stores and quality control.
8. **Verifying invoices and payment:** Match order, receipt and invoice before the accounts department pays.
9. **Maintaining records:** Purchase files, price lists and supplier performance.
10. **Inventory coordination:** Work with stores to avoid shortage or excess stock.
11. **Market research and cost reduction:** Study price trends, value analysis and standardization.
12. **Disposal of scrap and surplus.**

```text
Requisition -> Source -> Quotation -> Order
 -> Follow-up -> Receipt/Inspection -> Payment
```

A good purchasing department lowers cost and ensures continuous operation, for example, NEA buying transformers and cables on schedule.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Which set gives the 'five rights' of purchasing?
   A. Right quality, quantity, price, source and time
   B. Right price only
   C. Right profit, tax, loan, owner, staff
   D. Right colour, size, brand, shop and weather
   Answer: A. Purchasing obtains materials in right quality, quantity, price, source and time. (Key point: Five rights)

2. Before accounts pays, which matching is done?
   A. Order, receipt and invoice are matched
   B. Nothing is checked
   C. Only the supplier's address
   D. Only the advertisement
   Answer: A. Verifying invoices means matching order, receipt and invoice. (Key point: Invoice verification)

3. What is the purpose of follow-up and expediting?
   A. To lower quality
   B. To advertise
   C. To ensure on-time delivery
   D. To cancel the order
   Answer: C. Follow-up ensures the supplier delivers on time. (Key point: Follow-up)

4. What starts the purchasing cycle?
   A. Purchase requisition from the user department
   B. Payment
   C. Inspection
   D. Disposal of scrap
   Answer: A. The department receives and analyses purchase requisitions stating what, how much and when. (Key point: Start of process)