Explain each of the following methods of purchasing goods: (i) purchasing strictly by requirement; (ii) purchasing for a specified period.(4 marks)June/July 2020

(i) Purchasing strictly by requirement: Purchasing strictly by requirement involves buying goods only as they are needed, rather than purchasing in advance or stockpiling. This method of purchasing is often used when goods are perishable or have a short shelf life, or when the organization does not have the storage space or financial resources to maintain large inventories.

(ii) Purchasing for a specified period: Purchasing for a specified period involves buying goods in advance for a predetermined period of time, such as a month or a year. This method of purchasing is often used when goods are in high demand or when it is more cost-effective to purchase in larger quantities. It may also be used when an organization has a long-term contract with a supplier, and wants to ensure that it has the necessary goods on hand to fulfill the terms of the contract.