ABS Software - Purchase Evaluation (PURE)

The Purchase Evaluation program (PURE) is a complete decision support sub-system for determining the economic worth of raw materials. PURE uses linear programming techniques to determine:

  • The maximum or "break-even" price of materials quoted for purchase
  • The useable quantities for each quoted material
  • The metal mix cost impact that would occur due to the loss of a material source or supplier

The PURE program provides immediate benefits by producing detailed material utilization information, prior to the purchase, in order to help reduce excess inventory. PURE is also used to perform financial "what if" analyses.

PURE has two major decision-making functions; the first is to assist you in "evaluating" raw materials for purchase, and the second is for performing "impact" studies.

The evaluation function is used to determine the economic worth that materials, "quoted" as available, have to your current metal mix cost.

The evaluation adheres to your metallurgical requirements and current inventory position when performing cost analyses. PURE also considers a "market" file which acts as a stabilizer to project a more reasonable analysis. The result of the evaluation is either positive or negative.

If the result is positive, PURE reports the anticipated quantities, the cost/lb. savings over current cost/lb. melting expense, and the "break even" price for the "quoted" or external material. The "break even" price is the price at which no further savings will be achieved. If the result is negative, PURE computes the cost/lb. necessary (worth) to make the material favorable for your use.

The impact function is used to perform "what if" studies. Some examples are "what if"...

  • We must pay more for a raw material when our current contract expires
  • We are unable to use a material due to equipment failure, weather conditions, contamination, etc.
  • We limit or curtail the use of certain scraps below current usage levels

The impact function also provides detailed reports outlining actual and anticipated metal mix cost variances for the impact study.