## The Five Purchasing Questions
Before initiating any purchase, the materials purchase department must answer five questions:
1. What to purchase?
2. When to purchase?
3. How much to purchase?
4. From where to purchase?
5. At what price to purchase?
### 1. What to purchase?
Materials are bought as per requisitions from stores/user departments. For regularly used materials, purchase follows Standard Operating Procedures (SOP).
### 2. When to purchase?
Core idea: Order at the right time so materials arrive before production needs them — ensuring uninterrupted production.
Key factors influencing timing:
- Material availability in the market (ease of supply)
- Lead time — time from placing the order to delivery at the production site
- Consumption pattern — rate and regularity of usage
Related concepts: Re-order Stock Level and the Just-in-Time (JIT) approach (minimise inventory by receiving materials only when needed).
### 3. How much to purchase?
Depends on: consumption pattern, supplier's minimum order size, quantity discounts, storage cost and capacity, and working-capital requirements. → Quantified by Economic Order Quantity (EOQ).
### 4. Where to purchase? (Supplier selection)
A critical and sensitive step, especially for PSUs where public money is involved.
- Attracts scrutiny from CVC (Central Vigilance Commission), CAG (Comptroller and Auditor General), and auditors.
- Sensitive because it must uphold the constitutional value of "Equality of Status and Opportunity" — fair, transparent competition.
- Begins with Enquiry / RFP (Request for Proposal) / NIT (Notification Inviting Tender), issued locally or globally.
- Mode of floating tender: Offline (manual circulation) or Online (websites / GeM).
- GeM (Government e-Marketplace): online portal for government procurement; enables e-bidding, reverse e-auction, and demand aggregation; made mandatory by the Ministry of Finance.
### 5. At what price to purchase?
The lowest bidder (L1 bidder) is generally selected.