Ordering and Managing Raw Materials - F.A.Q.

53.From how many different suppliers can a firm order its raw materials?
Answer: A firm can order products from only one supplier in a single quarter.

54.What are the differences between the different suppliers?
Answer: Initial price and changes of price per quantity is difer between suppliers.

55.What happens when the amount of raw materials ordered is not sufficient for production. That is the production ends in the middle of quarter?
Answer: In this case where the firm runs out of raw materials during the quarter, a special delivery of raw materials will be made in order to supply the materials need for the firm. The firm will be charged an extra cost for this delivery.

56.Where can one see the cost of using raw materials?
Answer: The 'Raw Materials' screen contains the number of units of raw material used. For further information on the associated costs, see the management report regarding raw materials.

57.Why ordering a single shipment of raw materials in each quarter is not the best option?
Answer: While in stock, raw materials tend to disintegrate at a rate of 1% per day. Thus, ordering one large shipment every quarter will result in a large quantity of raw materials lost due to disintegration.

58.What does 'Future Contract' mean? How can one activate this kind of contract?
Answer: In a case of a change in the raw materials unit cost, a future agreement ensures that the price per unit signed with a specific contractor will remains the same. Activate this option via the raw materials screen by clicking the 'Raw Materials Future Order' option and remaining with the same supplier.

59.Is it possible for different firms to pay a different price for the same quantity of raw materials?
Answer: Yes. The raw materials cost per unit is set by the contractor, the number of units ordered and if a future contract is used. Thus different firms in the same quarter may pay a different price per unit of raw materials.

60.What amount of raw materials is used when producing products? How is this amount affected?
Answer: Production consumes between 1.03 to 1.15 units of raw materials per product for Product 1 and third of this quantity for Product 2. As machines age or if staff are not skilled these numbers may increase.