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a) Centralized system In this case the duty and responsibility of purchasing is done by one purchaser is purchasing department.
b) Decentralized system the duty and responsibility of purchasing is placed with individual branch department or geographical department.
Advantages of centralized system
i) Less expensive since few activities are concentrated in one department.
ii) There is better control because of effective and efficient monetary.
iii) There is more accountability.
iv) There is bulk buying hence economies of scale are enjoyed.
v) Fewer staffs are employed.
vi) There is expertise in buying due to specialization.
N/B: The advantages of centralization are the disadvantages of decentralization.
Advantage decentralization
i) Reduces risk since purchasing is spread to many department.
ii) It is specialized in terms of specific material requirement.
iii) There is accountability.
iv) Less bureaucratic.
v) There are 6 minimum production breakdown due to the short time required in having the materials.
N/B: The advantages of decentralized are the disadvantages of centralization
Wilfykil answered the question on August 5, 2019 at 09:24
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