Buying and Assortment
Buying process
The exam tests the sequence and the commercial judgement behind it: identify customer needs; shortlist vendors; request samples and quotations; compare landed cost and terms; negotiate; place purchase orders; inspect quality; receive and pay. A purchase order should specify SKU, quantity, price, tax, delivery date, packing, payment terms and return/rejection rules.
Assortment decisions
- Breadth: number of product categories or lines.
- Depth: number of variants within a line-size, colour, flavour, pack size.
- Consistency: how well items fit the store’s positioning.
- Price points: good–better–best architecture.
- SKU rationalisation: remove slow, duplicate or unprofitable items.
Worked example
A retailer compares two suppliers for 100 units. Supplier A quotes ₹90 per unit plus ₹500 freight, with 2% cash discount. Landed cost = 9,000 + 500 − 180 = ₹9,320, or ₹93.20 per unit. Supplier B quotes ₹94 with free delivery and 30-day credit. B is ₹0.80 cheaper per unit, but A’s lower cash outlay may still matter. The reasoning: compare landed cost, payment terms, quality and reliability-not the quoted price alone.
Traps
The lowest quotation may not be the lowest landed cost. Do not confuse breadth with depth: adding flavours increases depth, not breadth. Check minimum order quantity, expiry, return policy and GST compliance. Do not buy a large quantity only because of a trade discount if sell-through is weak.