BIRD'S-EYE VIEW OF THE BALDWIN LOCOMOTIVE WORKS, PHILADELPHIA, PENNA.

Cyclopedia

of

Commerce, Accountancy,
Business Administration

Volume 2

A General Reference Work on

ACCOUNTING, AUDITING, BOOKKEEPING, COMMERCIAL LAW, BUSINESS
MANAGEMENT, ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION,
BANKING, ADVERTISING, SELLING, OFFICE AND FACTORY
RECORDS, COST KEEPING, SYSTEMATIZING, ETC.

Prepared by a Corps of

AUDITORS, ACCOUNTANTS, ATTORNEYS, AND SPECIALISTS IN BUSINESS METHODS AND MANAGEMENT

Illustrated with Over Two Thousand Engravings

TEN VOLUMES

CHICAGO
AMERICAN TECHNICAL SOCIETY
1910

Copyright, 1909

BY

AMERICAN SCHOOL OF CORRESPONDENCE

Copyright, 1909

BY

AMERICAN TECHNICAL SOCIETY

Entered at Stationers' Hall, London
All Rights Reserved

Authors and Collaborators

JAMES BRAY GRIFFITH, Managing Editor.

Head. Dept. of Commerce, Accountancy, and Business Administration, American School of Correspondence.

ROBERT H. MONTGOMERY

Of the Firm of Lybrand, Ross Bros. & Montgomery, Certified Public Accountants.

Editor of the American Edition of Dicksee's Auditing.

Formerly Lecturer on Auditing at the Evening School of Accounts and Finance of the University of Pennsylvania, and the School of Commerce, Accounts, and Finance of the New York University.

ARTHUR LOWES DICKINSON, F. C. A., C. P. A.

Of the Firms of Jones, Caesar, Dickinson, Wilmot & Company, Certified Public Accountants, and Price, Waterhouse & Company, Chartered Accountants.

WILLIAM M. LYBRAND, C. P. A.

Of the Firm of Lybrand, Ross Bros. & Montgomery, Certified Public Accountants.

F. H. MACPHERSON, C. A., C. P. A.

Of the Firm of F. H. Macpherson & Co., Certified Public Accountants.

CHAS. A. SWEETLAND

Consulting Public Accountant.

Author of "Loose-Leaf Bookkeeping," and "Anti-Confusion Business Methods."

E. C. LANDIS

Of the System Department, Burroughs Adding Machine Company.

HARRIS C. TROW, S. B.

Editor-in-Chief, Textbook Department, American School of Correspondence.

CECIL B. SMEETON, F. I. A.

Public Accountant and Auditor.

President, Incorporated Accountants' Society of Illinois.

Fellow, Institute of Accounts, New York.

JOHN A. CHAMBERLAIN, A. B., LL. B.

Of the Cleveland Bar.

Lecturer on Suretyship, Western Reserve Law School.

Author of "Principles of Business Law."

HUGH WRIGHT

Auditor, Westlake Construction Company.

GLENN M. HOBBS, Ph. D.

Secretary, American School of Correspondence.

JESSIE M. SHEPHERD, A. B.

Associate Editor, Textbook Department, American School of Correspondence.

GEORGE C. RUSSELL

Systematizer.

Formerly Manager, System Department, Elliott-Fisher Company.

OSCAR E. PERRIGO, M. E.

Specialist in Industrial Organization.

Author of "Machine-Shop Economics and Systems," etc.

DARWIN S. HATCH, B. S.

Assistant Editor, Textbook Department, American School of Correspondence.

CHAS. E. HATHAWAY

Cost Expert.

Chief Accountant, Fore River Shipbuilding Co.

CHAS. WILBUR LEIGH, B. S.

Associate Professor of Mathematics, Armour Institute of Technology.

L. W. LEWIS

Advertising Manager, The McCaskey Register Co.

MARTIN W. RUSSELL

Registrar and Treasurer, American School of Correspondence.

HALBERT P. GILLETTE, C. E.

Managing Editor, Engineering-Contracting.

Author of "Handbook of Cost Data for Contractors and Engineers."

R. T. MILLER, JR., A. M., LL. B.

President, American School of Correspondence.

WILLIAM SCHUTTE

Manager of Advertising, National Cash Register Co.

E. ST. ELMO LEWIS

Advertising Manager, Burroughs Adding Machine Company.

Author of "The Credit Man and His Work" and "Financial Advertising."

RICHARD T. DANA

Consulting Engineer.

Chief Engineer, Construction Service Co.

P. H. BOGARDUS

Publicity Manager, American School of Correspondence.

WILLIAM G. NICHOLS

General Manufacturing Agent for the China Mfg. Co., The Webster Mfg. Co., and the Pembroke Mills.

Author of "Cost Finding" and "Cotton Mills."

C. H. HUNTER

Advertising Manager, Elliott-Fisher Co.

FRANK C. MORSE

Filing Expert.

Secretary, Browne-Morse Co.

H. E. K'BERG

Expert on Loose-Leaf Systems.

Formerly Manager, Business Systems Department, Burroughs Adding Machine Co.

EDWARD B. WAITE

Head, Instruction Department, American School of Correspondence.

Authorities Consulted

The editors have freely consulted the standard technical and business literature of America and Europe in the preparation of these volumes. They desire to express their indebtedness, particularly, to the following eminent authorities, whose well-known treatises should be in the library of everyone interested in modern business methods.

Grateful acknowledgment is made also of the valuable service rendered by the many manufacturers and specialists in office and factory methods, whose coöperation has made it possible to include in these volumes suitable illustrations of the latest equipment for office use; as well as those financial, mercantile, and manufacturing concerns who have supplied illustrations of offices, factories, shops, and buildings, typical of the commercial and industrial life of America.

JOSEPH HARDCASTLE, C. P. A.

Formerly Professor of Principles and Practice of Accounts, School of Commerce, Accounts, and Finance, New York University.

Author of "Accounts of Executors and Testamentary Trustees."

HORACE LUCIAN ARNOLD

Specialist in Factory Organization and Accounting.

Author of "The Complete Cost Keeper," and "Factory Manager and Accountant."

JOHN F. J. MULHALL, P. A.

Specialist in Corporation Accounts.

Author of "Quasi Public Corporation Accounting and Management."

SHERWIN CODY

Advertising and Sales Specialist.

Author of "How to Do Business by Letter," and "Art of Writing and Speaking the English Language."

FREDERICK TIPSON, C. P. A.

Author of "Theory of Accounts."

CHARLES BUXTON GOING

Managing Editor of The Engineering Magazine.

Associate in Mechanical Engineering, Columbia University.

Corresponding Member, Canadian Mining Institute.

F. E. WEBNER

Public Accountant.

Specialist in Factory Accounting.

Contributor to The Engineering Press.

AMOS K. FISKE

Associate Editor of the New York Journal of Commerce.

Author of "The Modern Bank."

JOSEPH FRENCH JOHNSON

Dean of the New York University School of Commerce, Accounts, and Finance.

Editor, The Journal of Accountancy.

Author of "Money, Exchange, and Banking."

M. U. OVERLAND

Of the New York Bar.

Author of "Classified Corporation Laws of All the States."

THOMAS CONYNGTON

Of the New York Bar.

Author of "Corporate Management," "Corporate Organization," "The Modern Corporation," and "Partnership Relations."

THEOPHILUS PARSONS, LL. D.

Author of "The Laws of Business."

E. ST. ELMO LEWIS

Advertising Manager, Burroughs Adding Machine Company.

Formerly Manager of Publicity, National Cash Register Co.

Author of "The Credit Man and His Work," and "Financial Advertising."

T. E. YOUNG, B. A., F. R. A. S.

Ex-President of the Institute of Actuaries.

Member of the Actuary Society of America.

Author of "Insurance."

LAWRENCE R. DICKSEE, F. C. A.

Professor of Accounting at the University of Birmingham.

Author of "Advanced Accounting," "Auditing," "Bookkeeping for Company Secretary," etc.

FRANCIS W. PIXLEY

Author of "Auditors, Their Duties and Responsibilities," and "Accountancy."

CHARLES U. CARPENTER

General Manager, The Herring-Hall-Marvin Safe Co.

Formerly General Manager, National Cash Register Co.

Author of "Profit Making Management."

C. E. KNOEPPEL

Specialist in Cost Analysis and Factory Betterment.

Author of "Systematic Foundry Operation and Foundry Costing," "Maximum Production through Organization and Supervision," and other papers.

HARRINGTON EMERSON, M. A.

Consulting Engineer.

Director of Organization and Betterment Work on the Santa Fé System.

Originator of the Emerson Efficiency System.

Author of "Efficiency as a Basis for Operation and Wages."

ELMER H. BEACH

Specialist in Accounting Methods.

Editor, Beach's Magazine of Business.

Founder of The Bookkeeper.

Editor of The American Business and Accounting Encyclopedia.

J. J. RAHILL, C. P. A.

Member, California Society of Public Accountants.

Author of "Corporation Accounting and Corporation Law."

FRANK BROOKER, C. P. A.

Ex-New York State Examiner of Certified Public Accountants.

Ex-President, American Association of Public Accountants.

Author of "American Accountants' Manual."

CLINTON E. WOODS, M. E.

Specialist in Industrial Organization.

Formerly Comptroller, Sears, Roebuck & Co.

Author of "Organizing a Factory," and "Woods' Reports."

CHARLES E. SPRAGUE, C. P. A.

President of the Union Dime Savings Bank, New York.

Author of "The Accountancy of Investment," "Extended Bond Tables," and "Problems and Studies in the Accountancy of Investment."

CHARLES WALDO HASKINS, C. P. A., L. H. M.

Author of "Business Education and Accountancy."

JOHN J. CRAWFORD

Author of "Bank Directors, Their Powers, Duties, and Liabilities."

DR. F. A. CLEVELAND

Of the Wharton School of Finance, University of Pennsylvania.

Author of "Funds and Their Uses."

Foreword

With the unprecedented increase in our commercial activities has come a demand for better business methods. Methods which were adequate for the business of a less active commercial era, have given way to systems and labor-saving ideas in keeping with the financial and industrial progress of the world.

Out of this progress has risen a new literature—the literature of business. But with the rapid advancement in the science of business, its literature can scarcely be said to have kept pace, at least, not to the same extent as in other sciences and professions. Much excellent material dealing with special phases of business activity has been prepared, but this is so scattered that the student desiring to acquire a comprehensive business library has found himself confronted by serious difficulties. He has been obliged, to a great extent, to make his selections blindly, resulting in many duplications of material without securing needed information on important phases of the subject.

In the belief that a demand exists for a library which shall embrace the best practice in all branches of business—from buying to selling, from simple bookkeeping to the administration of the financial affairs of a great corporation—these volumes have been prepared. Prepared primarily for use as instruction books for the American School of Correspondence, the material from which the Cyclopedia has been compiled embraces the latest ideas with explanations of the most approved methods of modern business.

Editors and writers have been selected because of their familiarity with, and experience in handling various subjects pertaining to Commerce, Accountancy, and Business Administration. Writers with practical business experience have received preference over those with theoretical training; practicability has been considered of greater importance than literary excellence.

In addition to covering the entire general field of business, this Cyclopedia contains much specialized information not heretofore published in any form. This specialization is particularly apparent in those sections which treat of accounting and methods of management for Department Stores, Contractors, Publishers and Printers, Insurance, and Real Estate. The value of this information will be recognized by every student of business.

The principal value which is claimed for this Cyclopedia is as a reference work, but, comprising as it does the material used by the School in its correspondence courses, it is offered with the confident expectation that it will prove of great value to the trained man who desires to become conversant with phases of business practice with which he is unfamiliar, and to those holding advanced clerical and managerial positions.

In conclusion, grateful acknowledgment is made to authors and collaborators, to whose hearty coöperation the excellence of this work is due.

Table of Contents

(For professional standing of authors, see list of Authors and Collaborators at front of volume.)

VOLUME II

SHOP OFFICE, WESTERN ELECTRIC COMPANY, NEW YORK CITY

PURCHASING AND STORES DEPARTMENT

PURCHASING DEPARTMENT

1. If the old axiom, "Goods well bought are half sold," holds true, the purchasing department may well be considered one of the most important in any business. In referring to the purchasing department we have in mind that department, or division of the business, whose duty it is to attend to the buying. In a large industrial enterprise this may mean a department headed by a purchasing agent with several assistants; in a department store, the buyers for the several departments; in a small retail business, the member of the firm who buys the goods. No matter whether the department be an extensive one, or one requiring but a part of the time of one man, the principle is the same.

Perhaps no other head of a department has greater need of complete information and systematic records of his department, than does the buyer. A man may have every qualification for a successful purchasing agent, but, unless he has the most detailed information to aid him in judging qualities and prices, his cannot be considered a successful department. On the other hand, many a man, with no other qualification than common sense, has built up a most successful purchasing department because his work was thoroughly systematized.

We will consider the purchasing department from two standpoints: The information required, and the routine work to be performed. Under the first head the requirements may be stated as:

1. List of dealers.

2. Full information about lines carried by each dealer or manufacturer.

3. Records of special quotations.

4. Information about qualities supplied by various dealers, to be obtained from records of past purchases.

LIST OF DEALERS

2. The purchasing agent will have no difficulty in securing a list of dealers. Even a new business is usually well supplied with circulars, catalogues, and other information showing which dealers handle certain lines. The principal concern of the purchasing agent is to so record this information that it will be instantly available.

In some cases it is found necessary to make special lists of dealers, and these are usually made on cards. A card is used for each article or class of material that may be of interest, and the name of the class is written at the top of the card. Below this are listed the names and addresses of dealers and manufacturers supplying that particular class of material. Since in most concerns this information can be combined with the system of catalogue indexing, we do not show a special form for this record.

CATALOGUE FILING AND INDEXING

3. A purchasing agent must necessarily gather much of the information required in the operation of his department from catalogues supplied by manufacturers. These catalogues are his technical library, in many cases supplying the only available information relative to a particular class of goods. Needless to say, some method must be provided for carefully preserving these catalogues. They must be filed in such a manner that they can be located quickly.

While every office has plenty of opportunities to accumulate an oversupply of catalogues, resulting in a tendency to discard all except those in which the purchasing agent may be interested at the time, it is better to err on the side of a liberal supply. A catalogue that comes in to-day may be of no immediate value, but it may become useful a little later. It would be impracticable to keep every catalogue and circular that reaches the office, but, if it is from a new concern, or offers any new ideas, it should be kept, even though the subject is not of especial interest at the moment.

Many systems of catalogue filing have been devised, and there are almost as many styles of catalogue files on the market as there are manufacturers of such equipment. No one system or style of filing will answer the requirements in every concern. Each must build up a filing system that will conform to existing conditions.

Though a system of universal application cannot be laid down, some general suggestions may prove of value. No matter what the style of receptacle used, catalogues are filed according to one of two methods: The alphabetical, or the numerical. The alphabetical method consists in the arrangement of catalogues in bookcases or other suitable devices, according to the names of the publishers. For a small number of catalogues, this is a very satisfactory system, for the very reason that a purchasing agent soon becomes familiar with the catalogues of different manufacturers, recognizing them by their size, shape, or color.

A modification of the alphabetical system is one in which the catalogues are arranged alphabetically by classes; that is, the lines of goods in which the purchasing agent is interested are divided into specific classes. In each of these divisions, the catalogues of all manufacturers listing that class of goods are arranged in alphabetical order. This method is also very satisfactory for a limited number of catalogues.

For a large catalogue file the numerical system will prove the most satisfactory. By this system each catalogue is given a number which should be plainly shown on the back of the catalogue. All catalogues of a specific class are placed in one group, and a series of numbers is set aside for the group. To illustrate, we might have machinery catalogues, numbers 1 to 100. All machinery catalogues would then be given a number in that series. If the number be increased beyond 100, the numbering system would be repeated by using 1a, 2a, etc.

With the numerical system, the catalogues of each group must be arranged in exact numerical order, so that any catalogue may be instantly located.

4. Files. As has already been stated, the style of file, as well as the method of filing, or indexing, must conform to the conditions in each individual office. However, the experience of the past is the best guide for the future. As a general rule, sectional bookcases will be found the most satisfactory for catalogues in bound form, that is, those with substantial covers, and particularly those that will readily stand on edge. An advantage of the sectional bookcase is that all catalogues can plainly be seen, and even though a numerical system be used, a man soon learns to recognize catalogues of certain manufacturers without referring to any number or indexing system.

In every catalogue file will be found pamphlets, circulars, and price lists which are not easily cared for in bookcases. For these a section of a vertical file is recommended, and in many cases this file has been used successfully for filing all sorts of miscellaneous catalogues. It may be expanded to any capacity, and can be used with equal success for either the alphabetical or numerical system of indexing.

Which is the better depends upon the circumstances, but in nearly every case either the sectional bookcase or the vertical file, or perhaps a combination of the two, will be found most satisfactory.

5. Catalogue Indexing. The principal value of a file of catalogues lies in the index. A miscellaneous lot of catalogues is of very little value unless it be properly indexed. True, most catalogues contain an index, but this is not the sort of index required by the purchasing agent. He does not care for an itemized list of every article manufactured by John Jones & Co., but he does want an index that will show him where he can find descriptions and prices of machines of a certain class. A catalogue may list thousands of articles in which the purchasing agent has no interest, where it lists ten that are of use to him. These ten articles are the ones which should be shown in his index.

Fig. 1. Subject Card for Catalogue Index

The principal index of the catalogue file is one arranged by subjects. A card used for this purpose is shown in Fig. 1. At the top of the card is listed the subject. Below this is given the names and addresses of all manufacturers supplying the goods listed. In the columns at the right are recorded the section number, catalogue number, and page. The section number refers to the section in the file where the catalogue will be found; the catalogue number to the catalogue itself; and the page to the number of the page in the catalogue. In making up such an index, it is unnecessary to include a long list of articles of no especial interest, but simply those which the concern is obliged to purchase. If an entirely new subject comes up, it can then be listed after suitable investigation.

These cards are filed alphabetically, according to the name of the subject. While in some large concerns a more elaborate file will be necessary, this index can usually be kept in a small card tray in a desk drawer.

Fig. 2. Title Card for Catalogue Index

When the numerical system of filing is used, another index is necessary to locate the catalogues by name. In most cases our chief concern would be to locate the catalogue by subject, but there are times when it becomes necessary to locate a catalogue by name. To provide for this cross-index, the card shown in Fig. 2 is used. It will be noted that the arrangement of this card is just the opposite of the subject index, the name and address of the manufacturer being given at the top of the card together with the reference to the section and catalogue numbers. On the lower half of the card are listed the names of articles, made by that manufacturer, in which we are interested. This card is also filed alphabetically, but, of course, under the name of the manufacturer. When the number of cards is limited, both forms can be filed in the same index by using contrasting colors. For instance, a buff color might be used for the subject index, and salmon for the name index.

SPECIAL QUOTATIONS

6. Every purchasing agent receives, in addition to published price lists, many special quotations on material and supplies in which he is interested. Very frequently quotations are received at a time when he is not in the market for the particular material offered, but they are nevertheless of value for possible future use, and should be carefully preserved.

Fig. 3. Card Form for Special Quotations

One method of handling special quotations is to set aside a special file, or a drawer, or a section of the regular file, to be used exclusively for quotations. The quotations, when such a file is used, are usually filed alphabetically according to the name of the material offered. This method of filing necessitates a cross-index to locate the letters by names of firms and is not entirely satisfactory, owing to the difficulty of locating the most advantageous quotations. There may be a dozen or more letters from different firms quoting prices on the same material, and, to find which is the lowest, all must be examined. Again, a firm will make quotations on several lines in the same letter, which necessitates copying a part of the items or reorganizing the filing system.

In a business receiving many such quotations, it is advisable to reserve a special file for them, but we recommend their being filed according to the names of firms. To provide an accessible record of special quotations, the use of a special form, either on cards or loose leaves, is recommended. While no form universally applicable can be devised, the several forms herein presented are very good examples of forms in use and offer some valuable points for study.

Fig. 3 is a conventional form. This is a card, at the top of which is provided space for recording the name of the article or class of material. Below this is a record of all quotations received, giving date, name of the firm from whom the quotation is received, and initials of the salesman making the quotation, when made in this manner. The columns following are for quantity, or size on which the quotation is based, the list price, discount, net, whether f. o. b. or delivered, and terms. The last two columns are for a record of orders placed.

One of these cards is used for each article or class of material on which special quotations are received. Every quotation is recorded, no matter from whom, and when the card is filled a new one is added. Whenever records on any one card become obsolete, the card can be destroyed, keeping the file up to date.

The cards are filed according to the names of the articles or classes of material. When the number of classes is limited, it will be satisfactory to index the cards by means of a straight alphabetical index. In this case quotations on bolts and all other articles, the names of which commence with b, would be filed back of the B index. If the number of articles is large, it is advisable to use blank index guides and write the names of classes of material. As an illustration, in some lines of manufacture, bolts will be used in all sizes. On the index would be written the word Bolts, and back of this the cards would be filed according to sizes, one card being used for each size of bolt. The same plan can be carried out for each class of material. It is also advisable, in a manufacturing business, to subdivide the file as, between materials—representing materials which actually enter into the construction of the product manufactured—and supplies—representing all classes of factory supplies.

A card especially designed for a record of quotations on articles which are listed in several sizes is shown in Fig. 4. The special feature of this form is the inclusion of several columns in which to record prices on a number of different sizes of the same article. This form would be especially applicable in recording prices on such articles as bolts, mentioned in the preceding paragraph.

Fig. 4. Quotation Card for Records of Prices of Several Sizes

ORDERS PLACED

7. Of equal importance is a record of orders placed. A purchasing agent needs to know where orders for a given article have been placed in the past, prices paid, promptness of delivery, and general character of goods received. A convenient method of recording this information is to use a card similar to the illustration, Fig. 5, which shows a form used for recording purchases of a given article between specified dates. The record itself shows the order number, quantity, name of vendor, and full information about prices, including total cost per unit. These cards are filed alphabetically, according to the name of the article, exactly as described for the records of special quotations.

Fig. 6 omits some of the details, but provides for notations relative to quantities, etc., under the heading, description. This form also shows total amount, thus furnishing a record of the gross investment in material of a given class.

Fig. 5. Detailed Record of Orders Placed

Fig. 6. Record of Orders, Including Price and Amount

Fig. 7 is used in a manufacturing business, and is intended to provide a record of orders placed which will prevent a duplication of orders. At the extreme right of this form is a column headed purpose. In many manufacturing businesses, orders for certain materials are placed after contracts have been received, and the material is specified for use on a certain contract or order. In other establishments several lines of goods are manufactured, but certain materials enter into the manufacture of all lines. The purchasing agent may receive requisitions from different sources for material required in these various lines, and his records should show for what lines or departments orders have been placed. Both of these contingencies are provided for in this form, as the purpose of each order is plainly stated.

Fig. 7. Order Record of a Manufacturer, Showing Purpose for Which the Goods are Required

Fig. 8. Record of Orders Providing for Details of Each Order

Fig. 8 is another special form, designed for use where certain particulars are required. In devising a form, it should be made as simple as possible, but, at the same time, provision should be made for recording all particulars that may be of especial value in the business in which it is to be used. The forms shown are presented, not as being ideal for use in all cases, but for their suggestive value.

It is immaterial whether these forms be on cards or in loose-leaf form. That is a question of individual preference, and can only be decided by the person who is to make use of the system.

A good example of a form designed especially for use in a loose-leaf system is shown in Fig. 9. This gives full information about both orders and receipts, furnishing complete information relative to quantities of any particular line handled.

Fig. 9. A Loose-Leaf Record of Goods Ordered and Received

The manner of filing is the same as with the card system, except that these sheets are arranged between suitable indexes in a loose-leaf binder. If desired, the order records and special quotations can be filed together. By using forms of different colors the two can be filed in the same index. This is a very convenient arrangement, for then all records of both quotations and orders are found together. In some cases all of the information required will be found on the order records. When special quotations are received they can be filed in front of, or immediately back of, this record.

While in some offices other special records may be advisable, all necessary information for the average office relative to sources of supply, prices, etc., are provided by catalogues and records of quotations and prices described. Any other information required can be provided for by a modification of the forms referred to.

DEPARTMENT ROUTINE

8. Any discussion of the routine duties of the purchasing department is necessarily more or less theoretical and any method of procedure laid down is subject to such modification as will reduce it to a practical working basis for the individual establishment. To present the subject in a practical manner, therefore, this discussion will be confined to the needs of an average manufacturing business. As has been stated elsewhere in these papers, it is much less difficult to modify a system designed to care for all details in a large establishment than to expand the simple systems of a small business.

The duties of the purchasing agent in respect to the actual purchase of goods may be classified as follows:

1. Receiving requisitions, or orders for materials and supplies required for stock or in different departments.

2. Placing and following up orders.

3. Checking receipt of goods.

4. Checking invoices for prices.

5. Filing order copies and requisitions.

9. Requisitions. Under ordinary circumstances the purchasing agent will place no orders until he has first received a requisition from either the stores department or the department that requires the material. The requisition should in every case state the purpose for which the material or supplies is required, as well as by whom wanted.

Each department should be supplied with its own requisition blanks, and, to make them distinctive, a different color should be adopted for each department. Each department should also be identified by a letter which will be printed on the requisition blank in connection with a serial number. Thus the requisition numbers of one department will start with A1, another B1, etc.

A positive rule should be laid down that all requisitions issued by one department are to be signed by one person, usually the foreman. This rule must be rigidly enforced and no requisitions honored without the proper signature.

While requisitions should be drafted in a form to meet individual requirements, Fig. 10 is given as a typical example that will be found suitable in a large majority of offices.

The requisition, as a rule, is made in duplicate. The original goes to the purchasing agent and the duplicate is retained by the foreman. In some of the larger establishments a triplicate form is used, the original and duplicate being sent to the purchasing agent. The duplicate is then returned to the foreman with proper notations to show that the order has been placed.

There are very few cases, however, where this is necessary. It is not a good plan to require the foreman to keep records that can be eliminated, and the average foreman does not care when or where the order is placed; all he wants is the material. He has no interest in going back of the purchasing agent on whom he has made requisition.

When the factory is located at a distance from the office, requisitions should be in triplicate and bear the O. K. of the superintendent or factory manager. The duplicate will then be filed in the factory office pending the receipt of the goods.