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

# Methods of purchasing

Organization and Management · Chapter 6: Purchasing and Marketing Management

- Asked in: 2074 Asoj, 4 marks; 2072 Chaitra, 5 marks; 2071 Shrawan, 4 marks; year not given (asked 3 times)
- 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-methods
- Whole chapter: https://www.bctengineer.com/md/semester_7/organization_and_management/chapter-6

## Question

What are the different methods of purchasing?

## Short answer

Common methods include hand-to-mouth, purchase on requirement, contract, forward, bulk, scheduled, centralized, tender/competitive bidding (mandatory for larger government purchases under the Public Procurement Act), quotation, direct, and JIT. Choice depends on cost, demand, and storage.

## Answer

Methods of purchasing describe how an organization buys its materials. The main methods are:

1. **Hand-to-mouth (as-needed) purchasing:** Buying small quantities only when needed. Suitable for perishable or expensive items and when storage cost is high.
2. **Purchase on requirement:** Buying exactly what is needed for a specific job or order, after getting a requisition; common in project work.
3. **Contract purchasing:** A fixed contract is made with a supplier for a certain period for a regular supply at a set price. Example: annual contract for fuel or stationery.
4. **Forward (speculative) buying:** Buying large quantities in advance expecting prices to rise. Risky if prices fall.
5. **Bulk (quantity) buying:** Buying in large lots to get quantity discounts and lower unit cost, but it needs storage space.
6. **Scheduled buying:** Purchasing at fixed intervals according to a delivery schedule, useful for continuous production.
7. **Group or centralized purchasing:** One central office buys for all units to get economies of scale (for example, ministries or bank branches).
8. **Tender / bidding (competitive) method:** Suppliers submit sealed bids and the lowest evaluated bidder gets the contract. It is required for larger government purchases (above set value limits) under the Public Procurement Act, 2063, with e-bidding through the e-GP system.
9. **Quotation method:** Prices are asked from several suppliers for smaller purchases.
10. **Direct purchase:** Directly from a sole supplier for emergencies or small value items.
11. **Just-in-time (JIT):** Receive goods only as required in production, minimising inventory.

Choice depends on cost, value, demand, storage, shelf life and legal rules.

## Check yourself

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

1. When is hand-to-mouth purchasing suitable?
   A. For government tenders
   B. For speculation
   C. For huge discounts
   D. For perishable or expensive items and when storage cost is high
   Answer: D. Small quantities are bought only when needed. (Key point: Hand-to-mouth)

2. What is the risk of forward (speculative) buying?
   A. Shortage of storage never occurs
   B. Delay in delivery
   C. No inventory at all
   D. Loss if prices fall
   Answer: D. Bulk buying in advance expecting a price rise loses if prices fall. (Key point: Forward buying)

3. Which method is compulsory for the government under the Public Procurement Act, 2063?
   A. Hand-to-mouth
   B. Tender/bidding (e-bidding via e-GP)
   C. Forward buying
   D. Direct purchase
   Answer: B. Public bodies must use competitive bidding. (Key point: Tender method)

4. What is the aim of just-in-time purchasing?
   A. Receive goods only as required, minimising inventory
   B. Buy once a year
   C. Buy only from one supplier
   D. Maximise inventory
   Answer: A. JIT delivers goods as production needs them. (Key point: JIT)