Purchasing One

Flashcard maker : Lily Taylor
Advantages of co-op purchasing
Lower AP price, strong negotiator, cost and quality control
Disadvantages of co-op purchasing
Lowest AP price may not be lowest EP price; you may not be able to get exactly what you want if others don’t want it
Terms for co-op purchasing
Communal buying, shared buying, group purchasing organization, aggregate buying group
A franchisee must purchase from a franchisor’s
Specific specifications
Who employs a full-time receiving agent in a large independent hospitality operation?
Accountant
What is a national contract with a primary source?
Large hospitality organization
What kind of contract covers the AP price each restaurant in a large hospitality corporation must pay?
National contract
Who would be in charge of ordering and receiving merchandise in a small operation?
Owner-manager
What is a kitchen steward?
Manager who has food-buying responsibilities; may also be responsible for food storage
What are the responsibilities of a VP of purchasing?
All purchasing activities–set purchasing guidelines, negotiate contracts, research vendors and products, and perhaps oversee distribution
Advantages of centralized purchasing are
presence of a strong negotiator, cost and quality control, cost reduction
A salesperson consulting with the user of a piece of equipment instead of with the buyer is an example of
Backdoor selling
What restricts a buyer’s purchasing authority?
Quantity limits, price limits, approved suppliers
Buyers typically undergo two types of performance evaluations; operational and
Procurement
What are major potential conflicts that can occur between buyers and hourly employees?
Major conflict occurs when a buyer tries to exert control or authority over employees someone else supervises
What are the three main areas of the job specification for a purchasing employee?
Technical, interpersonal, conceptual
What discounts are legal for the buyer to accept from food suppliers?
Quantity, volume, cash & promotional; cash and promotional are risky
List interpersonal skills
Conducting a performance appraisal, interviewing a sales representative, training an employee, handling a customer complaint
The inventory turnover is equal to
Actual cost of products used or sold/average inventory level kept at the operation
What should the approximate food, beverage, and nonfood supplies inventory value of a full-service restaurant be?
1% of annual sales volume
A good rule of thumb in the restaurant business is that the value of the food inventory should not exceed approximately one-third of the:
Normal month’s total food costs
What lists the duties to be performed for a particular position in a company?
Job description
What are qualities that would be listed in the typical job specification for buyers?
Technical, interpersonal, conceptual
The materials budget procedure is most likely to be used by a hospitality operation that:
Serves a captive audience; employee feeding, college feeding, hospital feeding, prison feeding, etc.
What is an objective of the purchasing function?
Maintain and set rigid quality standards for produce; looser for other foods
If you pay your bill before the due date, you may be able to obtain a:
Cash discount
Paying an invoice on the day the shipment is delivered may result in a:
Cash discount
To obtain a quantity discount, an operator agrees to buy a large amount of an item. To obtain the volume discount, he or she agrees to buy:
A huge volume of goods, but more than one type of merchandise
A discount granted by a supplier if the buyer agrees to purchase a large amount of one type of product is referred to as a
Quantity discount
Reciprocal buying refers to
“You buy from me, I’ll buy from you” (or do something special)
A stock-out is intolerable to a buyer’s company primarily because:
If you cannot provide a product, the customer will probably go elsewhere, not return. Plus, their opinion of your operation will worsen and they will not recommend you to others
Give an example of a technical skill
Creating/costing a recipe, preparing a recipe, preparing a work schedule developing job descriptions
The ability to cost out a menu is considered to be what kind of skill?
Technical
One of the advantages of specifications is
They serve as quality control/cost control standards, help avoid misunderstandings and allow others to fill in for the buyer temporarily
A food processing plant normally must undergo continuous government inspection for wholesomeness if
They sell meat/poultry/eggs
Who usually helps write food product specifications?
Owner-manager, buyer, users
Frozen products should come in packaging sufficient to withstand the extreme cold without
Breaking
The major criterion a federal government inspector evaluates when grading a food item is
Appearance
What is a measure of quality used by foodservice buyers?
Price, quality, amount, time, will it meet objectives?
What is misrepresenting product identification on your foodservice menu?
Illegal; violating truth in menu standards
The NSF International approval seal on a piece of equipment indicates that the equipment
Meets its standards for sanitation
The objective of bid buying is to obtain
The lowest possible AP price
A packer’s brand
Is an indication of quality
A food item’s point of origin is an important purchasing a menu planning consideration because
Flavor/texture can vary between growing regions; may want to support local sources; must tell the truth in a menu; freshness; illegal/cannot violate company policy; must purchase from a reputable supplier
Poor packaging materials, as well as poor packaging procedures, can
Result in rapid deterioration of a product
Another term for product specification is
Product identification
What information should be included on a product spec?
Quality, package size, time, etc.
A description of all the product characteristics required to fill certain production and/or service needs may be referred to as a
Purchase specification
In order to decide quality standards to include on a spec, buyers must be sure to measure the types of quality standards that
His or her customers expect
What is considered the most important piece of information to include on a spec?
Intended use
Writing specs that are too tight tends to
Waste time and money
What is normally not included in a product spec?
Edible portion cost
Specs that are too tightly written most often lead to
Spending a lot of time, money, and effort writing specs and letting bids only to find that just one supplier meets them and they must take it or leave it. Then the supplier can ask however much they want for the product
What must be included in a product spec?
Description of all the characteristics in a product required to fill a certain production or service need
What would be the most important consideration when determining what type of information to include on a spec?
Goals and policies of the organization
Specifications that request a quality that is very difficult for suppliers to provide can often add to a product’s
Edible portion cost (but not always its value)
What are US grades
Rating system used by the federal government to indicate the quality of food products (not all foods are graded)
The USDA can inspect food items when they are in the hands of
Any member of the channel of distribution
The primary function of the USDA Acceptance Service is:
To help prepare specs. They will stamp every item/package to certify product compliance. They will inspect according the buyer’s specification.
Private label brand strategy was developed and pioneered by which company?
Cisco
Some examples of quality levels of private label brands might include
Supreme, imperial, classic
Which one items are sold by count?
Apples, fruit, dinner rolls, specialty steaks, cornish game hens
The correct order size is influenced by two costs. They are:
Ordering cost and storage cost
The interval of days between the time an order is placed and the time it is delivered is referred to as
Lead time
The Levinson approach to ordering is generally used when purchasing merchandise that will be used
For specific parties and banquets
Which formula is used to calculate PD?
PD = PF x edible yield percentage
To compute an accurate ROP for an item, the buyer must have a good idea of that item’s
Usage pattern
The safety stock level is sometimes referred to as the
ROP (Reorder point)
Under par stock approach, if the buyer thought that there was going to be more business than normal, he or should
Raise the par; increase order size by ordering a safety stock
Another term for storage cost is
Carrying cost
What is the most accurate method of determining a product’s edible yield percentage?
Use the product for awhile; conduct your own study and compute an average of unavoidable waste
When seeking a lower AP price for a product, a buyer’s emphasis should be on
Quality (increasing value)
A blanket order is a form of
Volume discount
The point at which the AP price per unit is reduced by the supplier is referred to as the
Break point
Another term for cash rebate is
Coupon refund
The EP cost is equal to the AP price divided by the
Edible yield percentage
A foodservice operator should ensure that the amount of sales traded does not exceed what (when using the exchange bartering procedure)
10-15%
The primary purpose of the hedging procedure is to
Maintain a specific AP price
What is cost-plus purchasing arrangement?
AP cost = supplier’s cost + an agreed upon profit markup
The cost used by the supplier may be referred to as the
Landed cost
A major advantage of the one-stop shopping concept is
Reduction of ordering cost
A buyer may be able to earn a price discount from a supplier if he or she is willing to
Purchase used items, order a lot, blanket order, pay with cash
Which pricing procedures do suppliers prefer?
Buyer pricing
Buying food salvage or food from unlicensed purveyors is
A violation of public health codes (local health codes)
Purchasing damaged goods is sometimes referred to as
Salvage opportunity
“People don’t hedge enough. Hedging is an appropriate way to mitigate risk when making financial plans for the future” is a quote by
Glenn Millar
Dairy products (along with other commodities) are publicly traded on
Chicago Mercantile Exchage

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