Different ratios and indexes are following
Material Cost Indexes
1. Material cost index = material cost for a product
production cost of the product
2. Material cost/sales index = material cost of each product
sales value
3. Material variance index = value of material actually used
value of standard material quantity
Vendor Rating Index
1. Vendor rating index ( Quality) = no of lots rejected
no of lots received
2. Vendor rating index ( Delivery) = delivery on schedule
total no of deliveries
3. Vendor rating index ( Price ) = lowest price bid
price bid by vendor
4. Overall Vendor rating = vendor rating ( quality ) x f + vendor rating (
delivery)xf+vendor rating ( price ) xf where f is a constant factor
Material planning Index :
1.Price variance index = standard price- actual price
standard price
2. Lead Time Index = Average lead time this year
Average lead time last year
Efficiency Indexes
1. Manpower strength = Total staff in purchase
total company staff
Negotiation effieciency = actual price paid by the organisation
market price
Inventory and stores
Weeks inventory on hand = material in stock
Weekly consumption
Inventory turnover ratio ( finished good ) = annual sales
average inventory
Inventory turnover ( Raw material )= annual consumption
average inventory
Production loss due stock out = production loss due to unavailability
total scheduled production line
Stores index
Handling cost index = total handling cost
total value of material received and issued
Handling loss index = total value of losses due to handling
total value of material recd and issued
Storage loss index = value of inventory loss due to pilferage ,obsolescence
average value of inventory
Obsolescence index = value of non - moving items in inventory
total inventory value
Space Utilisation index = aArea used for storage
total storage area
Codification index = no of items codified
total number of items
Freight = lowest rate bid for freight
rate paid
Vehicle capacity utilisation = total load shipped
capacity x no of trips
Material Cost Indexes
1. Material cost index = material cost for a product
production cost of the product
2. Material cost/sales index = material cost of each product
sales value
3. Material variance index = value of material actually used
value of standard material quantity
Vendor Rating Index
1. Vendor rating index ( Quality) = no of lots rejected
no of lots received
2. Vendor rating index ( Delivery) = delivery on schedule
total no of deliveries
3. Vendor rating index ( Price ) = lowest price bid
price bid by vendor
4. Overall Vendor rating = vendor rating ( quality ) x f + vendor rating (
delivery)xf+vendor rating ( price ) xf where f is a constant factor
Material planning Index :
1.Price variance index = standard price- actual price
standard price
2. Lead Time Index = Average lead time this year
Average lead time last year
Efficiency Indexes
1. Manpower strength = Total staff in purchase
total company staff
Negotiation effieciency = actual price paid by the organisation
market price
Inventory and stores
Weeks inventory on hand = material in stock
Weekly consumption
Inventory turnover ratio ( finished good ) = annual sales
average inventory
Inventory turnover ( Raw material )= annual consumption
average inventory
Production loss due stock out = production loss due to unavailability
total scheduled production line
Stores index
Handling cost index = total handling cost
total value of material received and issued
Handling loss index = total value of losses due to handling
total value of material recd and issued
Storage loss index = value of inventory loss due to pilferage ,obsolescence
average value of inventory
Obsolescence index = value of non - moving items in inventory
total inventory value
Space Utilisation index = aArea used for storage
total storage area
Codification index = no of items codified
total number of items
Freight = lowest rate bid for freight
rate paid
Vehicle capacity utilisation = total load shipped
capacity x no of trips
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Ratios to evaluate performance of purchasing function
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