4

Mr Noppadon Muangkroot, Supply Manager of the Royal Thai Thermal Fuel Company (RTTFC) was reviewing a purchase requisition received from Department A of the company.

The requisition simply stated, "Buy a Tow Lift High Rise Forklift Truck, as per attached technical specification to be delivered by 1 June 2022."

Mr Noppadon was annoyed that, despite repeated reminders that requisitions should be comprehensive to enable effective procurement, the requisition that had been sent by Department A was quite incomplete.

He went up to the Head of Department A and said, "I need more information. I am sure that you are aware that the acquisition of equipment has a lot more involved than just the dollar value of the purchase."

Required:

1. What does Mr Noppadon mean by saying, "I am sure that you are aware that the acquisition of capital equipment has a lot more involved than just the dollar value of the purchase?" Explain from a procurement/supply management perspective.
2. What elements of costs would have to be considered when procuring capital equipment like a forklift truck?