CHAPTER 5: PURCHASING AND RECEIVING CONTROL

assalamualaikum and hi again! today, lets proceed to our lesson which is chapter 5 of hospitality cost control.

first of all, what is purchasing? well, purchasing is the process of getting the right product into a facility at the right time and in a form that meets pre-established standards for quality, quantity and price.

Purchasing cycle

(Identify needs)___  (Write specifications)  (Develop purchase order)

                            |

- (Formal method)     - (Informal method)

              |                                 |

-(issue bid request)      -( Price quotation)

- (tabulate and              - (Select vendor and place order)

   evaluate bid)

- (award contract)

(Receive and inspect deliveries)  (Store in proper are)  (Evaluate & follow up)

Purchase Specifications

• Product name or specification number
• Pricing unit
• Standard or grade
• Weight range/ size
• Processing and/or packaging
• Container size
• Intended use
• Other information such as product yield

Maximum and minimum inventory system

Inventory – A detailed and complete list of goods in stock

This amount depends on the usage and time required for ordering and delivery.

Economic Order Quantity (EOQ)-  is the order quantity that minimizes the total holding costs and ordering costs

*Formula*

Co  = Ordering cost per unit

D   = Demand

Ch = Holding cost

Purchase order / purchase record

Definition: A written sales contract between buyer and seller detailing the exact products to be ordered from a supplier. It will specify payment terms, delivery dates, item identification, quantities, shipping terms and all other obligations and conditions.

The receiving process

Receiving – point of which food service operations inspect the products and take legal ownership and physical possession of the items ordered.

The purpose is to ensure that the food and supplies delivered match established quality and quantity specifications.

Step:

1. inspect the delivery and check against purchase order

2. inspect delivery against invoice

3. accept order only if all quantities and quality specifications are met 

4. complete receiving records

5. immediately transfer goods to appropriate storage

when it come to purchasing, it is important to control it to avoid wastage. the purchasing department is responsible for this because when purchasing, money is used and that money is going to be used to generate profit. so purchase responsibly. thank you!