Dictionary of Procurement Terms

As applied to the transportation or movement of goods and material, the cost of, or charge, that applies to the service rendered by a carrier.

An unprocessed, basic material, input, or resource used in the manufacture of finished parts or products.

The quantity of goods required to sustain operations for a specified period of time, after which time orders will be placed for more goods.

A predetermined stock level such that, if the net stock falls at or below that level, action is taken to replenish the stock.

Repairs or maintenance to broken-down equipment only when necessary to avoid disrupting production.

1. Land and its permanently affixed buildings or structures. 2. Any property that is not personal property.

A cost that by its nature or amount does not exceed what would normally be incurred by an ordinarily prudent person in the conduct of competitive business. Often used in the context of “fair and reasonable” cost/price.