Question

A preliminary survey of the purchasing function indicates that
Department managers initiate purchase requests that must be approved by the plant superintendent,
Purchase orders are typed by the purchasing department using prenumbered and controlled forms,
Buyers regularly update the official vendor listing as new sources of supply become known,
Rush orders can be placed with a vendor by telephone but must be followed by a written purchase order before delivery can be accepted, and
Vendor invoice payment requests must be accompanied by a purchase order and receiving report.
One possible fault of this system is that:________

Answer 1

Answer: Purchases could be made from a vendor controlled by a buyer at prices higher than normal.

Explanation:

Based on the information given in the question, one possible fault of this system is that the purchases could be made from a vendor controlled by a buyer at prices higher than normal.

It should be noted that this system will help in curtailing the department managers buying unnecessary supplies. Also, payment cannot be made for supplies that are not received.