Purchasing contracts, guaranteeing

Sometimes a set of items such as all the process control instruments or all piping is lumped together, and a number of suppliers are asked to bid on this package. At other times the company may have a contract with, say, a pump manufacturer that guarantees the company will receive a specified discount on the cost of all pumps, if it purchases more than a certain number per year. Then the pumps would be purchased from this vendor. There are even instances where the company may forbid the purchase of items from a given vendor. For instance, one company found that the pumps it purchased from a particular manufacturer cost approximately 5 times as much to maintain as the other pumps it had performing similar tasks. The company refused to buy any more pumps from that manufacturer. 

Sales contract - A contract between a buyer and seller which should explain (1) What the purchase includes, (2) What guarantees there are, (3) When the buyer can move in, (4) What the closing costs are, and (5) What recourse the parties have if the contract is not fulfilled or if the buyer cannot get a mortgage commitment at the agreed upon time. 

Consider a coordination agreement in which the retailer pays w for each unit purchased as well as r per unit of leftover unused capacity. Such contracts are termed take-or-pay contracts and are found commonly in many Just-In-Time contexts. For example, it is reported ([52]) that Toyota guarantees that its actual orders will deviate by no more than 10% around forecasted offtakes and will pay for any deviations. In the transportation industry, Reynolds commits to minimum volumes to carriers and will pay if observed demand falls short of these minimum volumes. Eppen and Iyer [29] describe a backup agreement in the apparel industry, which consists of a payment of w per unit taken and a payment of per unit not taken. 

Recent newspaper articles focused on lead paint used on Thomas the Tank Engine toys, industrial chemicals in toothpaste, industrial and not pharmaceutical ingredients in children s medicine, chemicals in children s toys that can convert to harmful chemicals when ingested, and contamination of dog food products all indicate that certifying supplier quality in a supply chain is an important component of the purchasing function. However, in the absence of easy-to-perform quality assurance testing, supplier certification and contract incentives play an important role in guaranteeing product quality. 

To reduce the likelihood that a system will experience fire, many Companies write UL VO listings into contract requirements when purchasing electrical enclosures. The UL VO listing is a stringent flammability test for elastomers. But just because a material can serve in high temperature applications, does not automatically guarantee that it has adequate flammability resistance to qualify for the UL 94 VO rating. A case in point is the various brands of silicone. 

The purchasing of batteries in use by Deutsche Telekom takes place over framework contracts. Through these it is guaranteed that only released batteries and released battery accessories are delivered to the Telekom. Further deliveries can be abandoned if there are problems with a certain product within a short time. The acceptance of the delivery to the Telekom is given if proof of the observance of quality handicaps is produced by a type pattern test and regular audits at the manufacturer. Tests of several years that are enforced in the central laboratory of the Telekom in Steinfurt are prerequisite for the transaction of the type pattern test. The quality handicaps are worked out in a form of technical delivery conditions for the individual series. It is important on this occasion that no particular products are... 

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