1. © Copyright 2011 by the National Restaurant Association Educational Foundation (NRAEF) and published by Pearson Education, Inc. All rights reserved. Chapter 5 Purchasing and Inventory

2. Purchasing Overview  The purchasing process is everything involved in buying products and services for an operation: 1.Determine what an operation __________to buy. 2.Identify __________________ 3.________ products and services. 4.__________ deliveries. 5.________________products. PURCHASING GOALS 2 5.1 Chapter 5 | Purchasing and Inventory

3. Maintaining Supplies and Quality Standards  Tools to help purchasers buy the right amount of product:  1.  2.  3.  4.  5.  6.  Every item an operation produces must meet that operation’s standards for quality:  _____________is the key to drawing repeat customers.  An operation must have established ________________for each item or service.  ______________ are set by the chef, manager, and/or owner, and are easy to follow when purchasing brand-name items. 3 5.1 Chapter 5 | Purchasing and Inventory

4. Minimizing Expenditures and Staying Competitive  When ordering, the restaurant’s _____________(amt. of funds available to it at any given time) must be considered Ex. if a large amount of food inventory sits in storage for a while, the restaurant may need that money to pay other bills  To minimize spending, an operation needs to consider:  1.  2.  For any operation, all costs must be ___________ and the restaurant must be able to ___________customers. 4 5.1 Chapter 5 | Purchasing and Inventory.

5. Staying competitive  For an operation to stay competitive, it must:  Shop around for vendors who will provide the best combination of _________________for the operation’s needs.  Try to get the lowest possible _________________price or _______________price. 5

6. Channels of Distribution Flow  A ______________________________includes the particular businesses that buy and sell a product as it makes its way from its original source to a retailer.  There are three main layers in any channel of distribution:  Primary sources include the ____________________________________________  Intermediary sources include _____________________________________________  Retailers sell their products ____________________________________ 6 5.1 Chapter 5 | Purchasing and Inventory

7. Goods and Services: What’s Being Purchased  Food and Beverages: quality and consistency are key to delivering a desirable _____________________________________________  Nonfood Items: ________________________________  Smallwares and Equipment: require replacement ______________________________________________  Technology: ______________________________  Furniture, Fixtures, and Equipment (FFE): This category is also known as ______________________________________________ 7 5.1 Chapter 5 | Purchasing and Inventory

8. More Goods and Services  Business Supplies and Services: before using an outside marketing service, the amount of _________________________________________  Support Services: ____________________________________________  Maintenance Services: help keep the facility in ___________________________________________  Utilities: ___________________________________ 8 5.1 Chapter 5 | Purchasing and Inventory

9. Buyers: Who’s Doing the Purchasing  In independent or single-unit operations, the buyer of an operation’s product might be _____________________  Some restaurants use the formal-purchasing method to order goods and services ___________________________________ Suppliers then send restaurant bids ______________________________  Smaller operations may use informal purchasing methods _____________________from suppliers. Suppliers then give quotes, a notice _______________________________  A buyer must have integrity to prevent ___________ (money received in exchange for purchasing from a specific vendor) 9 5.1 Chapter 5 | Purchasing and Inventory

10. Determining Quality Standards  Quality: the value or worth that ________________________  Factors to be addressed when defining an operation’s quality standards include:  The Item’s Intended Use: Knowing how an item will be prepared and served (determines _______________________  The Menu: The buyer must specify in the quality standard exactly ______________________________________  Employee Skill Level: if a menu offers items that require extensive preparation, the operation will need ________________________  Seasonal Availability: The seasonal nature of produce and other items affects _____________________ and ______________.  Storage Capacity: An operation’s storage space limits the ___________________________ it can purchase, which may then affect the quality of some menu items. 10 5.2 Chapter 5 | Purchasing and Inventory

11. Writing Product Specifications  Product specifications, or specs, describe the ____________________________________________  __________ value: shredded vs. whole cheese  Acceptable __________  Place of _____________________  Buyers should always work with ____________________________________suppliers.  Buyers must be very familiar with the operation’s quality standards and product specifications and ___________________________________________ 11 5.2 Chapter 5 | Purchasing and Inventory

12. Ordering  Buyers conduct _______________________to decide if an operation should make an item from scratch or buy a ready-made version.  Buyers and managers use ___________________to forecast their buying needs.  A ____________________lists all menu items that the chefs will prepare on a given day.  Buyers use production sheets to spot signs of __________________________________________ 12 5.2 Chapter 5 | Purchasing and Inventory

13. Figuring Out What to Order  One of the most important ways managers try to limit food waste is by keeping accurate ________________________.  Determine the daily food cost %: Most managers try to stay at __% or below on daily food cost  Managers keep ___________that track each item sold from the menu. This record shows which items sell well, called __________, and ones that don’t sell well, called_________.  ________________levels are the ideal amounts of inventory items that an operation should have at all times: formula: 13 5.2 Chapter 5 | Purchasing and Inventory

14. Figuring out what to order cont.  Another way to ensure that an operation always has the proper level of stock on hand is to establish a _______________________, for each item. A reorder point is like a warning bell; it alerts an operation _________________________________________  Used when suppliers do not deliver _________________ 14

15. Ordering Forms  Buyers can place purchase orders by _________________________________________  When a chef believes that a piece of expensive equipment should be purchase or replaced, the chef must first fill out a __________________ and send it to company headquarters.  Once headquarters ___________ the purchase and notifies the buyer, the buyer can place the order. 15 A ___________________is a legally binding, written document that details exactly what the buyer is ordering from the vendor. P. 317 5.2 Chapter 5 | Purchasing and Inventory

16. Knowing Food Prices  Factors that affect a product’s value:  Time value: The price retailers pay for the convenience ____________________________________________  Form value: The price savings created when a buyer purchases ______________ quantities of food instead of individually portioned servings.  Place value: The differences in price of a product depending on _____________ it needs to be shipped.  Transportation value: The cost of choosing a ___________________________ to get goods delivered.  Service value: Additional convenience services that a vendor provides to its customers __________________ 16 5.2 Chapter 5 | Purchasing and Inventory

17. Receiving Orders  Guidelines for efficient receiving procedures include:  Plan __________ for shipments.  ___________ and ______ each delivery before receiving another one.  Record items on a ____________ sheet.  Correct _____________ immediately.  Maintain the ______________ area. Receivers have the right to refuse any delivery that doesn’t meet the operation’s standards. A _________________is written to ensure the vendor will credit the restaurant for rejected item. 17 _________________: inspecting, accepting, and, in some cases, rejecting deliveries of goods and services. A written ______________ must accompany all deliveries 5.3 Chapter 5 | Purchasing and Inventory

18. Storing Orders  ____________________are food products sold or distributed in a form that will spoil or decay within a limited period of time.  ________________are items that, generally due to packaging or processing, do not readily support the growth of pathogens.  When storing items in refrigerated storage:  Monitor food ________________ regularly.  Don’t ___________coolers.  Use ___________ shelving.  Keep cooler doors ______________ as much as possible.  Wrap or ___________ all food properly.  Store meat and produce in proper humidity levels ____________________________________________ 18 5.3 Chapter 5 | Purchasing and Inventory

19. Frozen and Dry Storage  When storing items in frozen storage:  Check freezer _______________ regularly.  Place frozen food deliveries in ________ once inspected.  Ensure good __________ inside freezers.  Clearly _________ food prepared on-site that is intended for frozen storage.  When storing items in dry storage:  Keep storerooms clean and dry.  Store dry food away from _______ and at least_____off of the floor.  Storeroom should be between ___________ degrees  Store staples (____________________) in airtight containers 19 5.3 Chapter 5 | Purchasing and Inventory

20. Taking Inventory  In the physical inventory method, the entire stock is ______________________on a regular basis.  In the perpetual inventory method, ___________________________________________  A physical inventory is an _____________of all items in stock, while a perpetual inventory is an ______________ of stock on hand based on data entry.  _________________ refers to the official procedures employees use when taking an item out of the storeroom and putting it into production (used to prevent ____________) 20 An ____________________ is a record of all products an operation has in storage and in the kitchen. 5.3 Chapter 5 | Purchasing and Inventory

21. Calculate Usage, Food Costs, and Loss  Tracking the amount of a product used during a period of time helps the buyer calculate how much _______________________________________  If sales of food for the period are less than the cost of food sold, then the operation is operating at a____________. P. 336 21 5.3 Chapter 5 | Purchasing and Inventory