Purchasing Final Exam Study Guide pt. 1

Because it is the first place a business can make or lose money.

What is the main reason that purchasing is so important to understand?

1.) Growers - Farmers, ranchers, fisherman providing fresh products.

2.) Manufacturers - Controls the production of an item from raw materials. Examples: wheat into flour, or oils from olives or soybeans.

3.) Processors - Sometimes referred to as a fabricator, takes one or more foods, and assembles into a new end product.

What are the three major sources that supply products to hospitality operations:

Specialist Distributor

A distributor that handles only one type or classification of product.

Full Line Distributor

Distributor that provides both food and non-food items.

Broad Line Distributor

Distributor that handles food, non-food, and equipment.

Brokers Distributor

Distributor agents that handle one or more primary sources, neither buying nor selling, they promote products.

Manufacturers Representatives

Distributor intermediaries that ofter specialized promotion and services for their products.

Commisaries

Distributors usually owned and operated by large food service companies, they prepare food in bulk for next use establishments.

Specialty meat cutting, packaging, aging, shipping, branding, or portioning.

What are some ways value can be added to products by services?

1.) Economic (supply and demand, added value, perceived value, overall conditions, inflation)

2.) Political (legislation, regulation)

3.) Ethical

4.) Technological (genetically engineered foods, product preservation, transportation, computerization, packaging)

What factors affect the distribution system?

1.) Maintain and adequate supply

2.) Minimize investment

3.) Maintain quality

4.) Obtain the lowest possible “EP” cost

5.) Maintain company’s competitive position

What are the objectives of purchasing?

(AP) As-Purchased Price

The cost of an item when purchased.

(EP) Edible Portion

The final cost of an item after trimming, boning, or removing any part of it that is not used.

Because it ensures receiving the correct foods that you need for your operation.

Why are specifications important?

1.) Tests (usage and tasting)

2.) Government Grades

3.) AP Prices

4.) Endorsements

What are some ways to determine quality of products?

1.) Intended use of the item

2.) Exact name of the product or service

3.) Packers or brand name

4.) U.S. Quality Grade

5.) Size Information

6.) Acceptable trim or waste

7.) Package size

8.) Type of package

9.) Preservation of processing method

10.) Point of origin

11.) Degree of ripeness

12.) Form

13.) Color

14.) Trade Association Standards

15.) Shelf Life

16.) Chemical Standards

17.) Price Range

What are the types of specifications?

1.) Business Volume

2.) Storage Available

3.) Cash Flow

4.) Specific Menu Abstract

5.) Shelf Life

6.) Convenience

What factors go into determining how much of a product to order?

1.) Price

2.) Selection

3.) Service

4.) Reputation

5.) Trust

6.) “E” Factor

What 6 major factors affect your choice of supplier?

Advantages: Convenience, buying power, pricing, and service.

Disadvantages: All eggs in one nest and can be out of the loop.

What are the advantages and disadvantages of one-stop shopping?

Purchasing → receiving → storage → inventory → issuing → production → service

(all these provide excellent opportunities to lose money)

How does the flow of goods go?

Obtaining the correct amount and the correct quality at the correct time with the correct supplier services at the correct EP cost.

What is the objective of purchasing?

A simple document that employees or departments use to ask for availability and buy needed goods or services.

Purchase Request

A commercial source document that is issued by a business’ purchasing department when placing an order with its vendors or suppliers.

What is a purchase order?

A time-stamped commercial document that itemizes and records a transaction between a buyer and a seller.

What is an invoice?

A document that allows you to collect all the essential information about a supplier.

What is a supplier’s form?

To check that the delivered order meets the criteria of the purchasing objective.

What is the objective of receiving?

1.) Competent personnel

2.) Proper receiving equipment

3.) Proper receiving facilities

4.) Appropriate receiving hours

5.) A copy of all specifications

6.) A copy of all purchase orders

What are the essentials for good receiving procedures?

1.) At Delivery Procedure:

a.) Record all items returned on invoice

b.) Get documentation of items returned/rejected

c.) Adjust invoice amount as needed

2.) After Delivery Procedure:
a.) Notify company of items to return

b.) Keep items safe/refrigerated as needed

c.) At pick-up time, get documentation of items returned

What are the two procedures for rejecting and returning incorrect/damaged items?

To prevent loss of merchandise due to theft, pilferage, and spoilage, and to aid in efficiency of purchasing operation by keeping stored items organized.

What is the objective of storage?

Pilferage

Removing of items for immediate consumption or use.

1.) Proximity of storage area to receiving and production areas.

2.) Access to proper maintenance.

3.) Proper security.

4.) Competent personnel to supervise and manage.

5.) Sufficient time to perform necessary duties.

6.) Storage regulations followed.

What are the essentials for proper storage?

1.) Like Items

2.) Cans-Jars-Small or Large Boxes

3.) Departmental-Shift-Meal

4.) Heavy-Light Items

5.) High Expense Items

6.) High-Low Use Items

7.) Alphabetical

8.) From Vendor

9.) Legal Requirements

10.) Sanitary Requirements

11.) Safety Requirements

Storeroom Organization Factors:

Physical Inventory

Items to be inventoried are physically counted and recorded, generally at the same time in a given period (daily, weekly, monthly, yearly). This type of inventory is the most accurate in yielding the total value and stock of your items.

Perpetual Inventory

Instead of counting items, a record is kept of item issuing or usage and deducted from initial amount and kept as a running total. This type of inventory is more labor intense, but can give you immediate information of theft or pilferage. It is not as accurate as physical and is used many times in liquor operations.

Beginning Inventory + Purchases - Transfers Out + Transfers In = Product Available - Ending Inventory = Total Food Cost ($)

(Ending inventory then becomes the beginning inventory for the next accounting period.)

How to perform a food cost calculation?

Total Food Cost (4) For The Acct. Period/Total Revenue For The Acct. Period = Food Cost %

How to perform a food cost percentage calculation?

Revenue

The total amount of sales for a particular period of time, department, or unit.

Cost

Total amount of calculated expense for the same period of time, department, or unit.

To distribute food, beverage, and additional supplies in a manner to ensure efficient and secure production and service, and maintain accurate distributed costs for all areas in an operation.

What is the objective of issuing?

Informal Issuing

Items are stored in a secure or un-secure place and production and service personnel retrieve them as needed with little or no documentation.

Formal Issuing

Items are stored in a secure location and are requisitioned by personnel from various departments, and either delivered to them, or picked up from the purchasing department.

Reconciling Issues

At the end of an accounting period, an inventory is done, and total food cast for the storeroom is calculated. This number should match the total amount of requisitioned food for that period.

1.) Fancy - Best grade, about 1% of all produce

2.) No. 1 - Bulk of items produces, most retailers purchase this

3.) Commercial - Slightly less quality than No. 1

4.) No. 2 - Much less quality than No. 1, very superior to No. 3

5.) Combination - Usually a mixture of No. 1 and No. 2

6.) No. 3 - Low quality products, just barely acceptable for packing

7.) Field Run - Ungraded products, wide variance in quality

What are the grades for fresh produce?

1.) A - The very best product with excellent color, uniform size, weight, and shape, few blemishes.

2.) B - Slightly less perfect than grade A.

3.) C - May contain some broken and uneven pieces, perhaps some odd shaped pieces.

• The flavor usually falls below grades A and B, and the color is not so attractive.

What are the grades for canned and dry goods?

1.) Grade A - Milk the government considers to be the fluid milk sold in retail stores and delivered and sold in stores.

2.) Manufacturing Grade - Sometimes called Grade B; milk in which more bacteria are allowed than in Grade A and is used for manufacturing milk products such as butter, cheese, ice cream, and processed products.

What are the grades for milk?

1.) AA

2.) A

3.) B

Grading Factors for Butter: Evaluates product’s flavor, odor, freshness, texture, and plasticity.

What are the grades for butter?

Margarine

_____ is not a dairy product and is produced by the use of vegetable-based oils.

butterfat content

The _____ of dairy products is a major consideration in rating the overall quality and richness of the product. As it increases, so does the AP price.

Pasteurization

The procedure by which products are heated to 212 degrees Farenheit very quickly, that cooled also very quickly. This procedure kills harmful bacteria in the product and does not affect quality.

Homoginization

The process by which milk products are force-”filtered” to reduce the size of fat globules to make them emulsify and not separate.

Overrun

The amount of air in a frozen product. The lower amount of this, the richer the product and higher quality.

Standard ice cream must weigh 4.5 lbs. per gallon, and contain 1.6 lbs. of total solid foods.

1.) Fresh Shell Eggs

2.) Whole Easy Eggs

3.) Egg Whites

4.) Hard Cooked Eggs

5.) Frozen Eggs

6.) Powdered Whites or Yolks

7.) Powdered Egg Albumen

8.) Pasteurized Shell Eggs

9.) Egg Yolks

10.) Cholesterol Free Products

These are only a sampling of what is available.

What are the different forms of eggs?

1.) Grade AA - Whites that are thick and firm, yolks that are high and practically free from defects, clean, unbroken shells. This grade is very hard to obtain because the eggs generally have to be a week or less old, and its quality deteriorates to Grade A.

2.) Grade A - Very similar to Grade AA, but whites are slightly less firm, and yolks not as high, but both Grade A and AA are very suitable for any product where presentation is important.

3.) Grade B - Whites that are thinner and yolks that are flatter than the higher grades. The yolks are also more susceptible to breakage during cooking and the shells can also be stained. This grade is usually used for finished products where appearance is not important.

Within all of the grades there are also ratings as “high” “medium” or “low” so in reality there are 9 total grades for eggs.

What are the grades for eggs?

grade

The _____ has no bearing on safety of the eggs.

Poultry

The term applied to all domesticated birds used for food.

1.) Grade A - This is the top poultry quality produced. Indicates a full-fleshed bird that is well finished and has an attractive appearance.

2.) Grade B - This bird usually has some dressing defects, such as torn skin. Also, the bird is generally less attractive.

3.) Grade C - This bird resembles a Grade B Bird, but it lacks even more in appearance. Also, part of its carcass may be missing or broken.

Grading refers to quality and inspecting for wholesomeness.

What are the grades of poultry?

1.) Seafood should have a pleasant scent or none at all, should not be “stinky”.

2.) If with scales, they should NOT come off the body easily.

3.) Eyes should be clear, spring back when pressed.

4.) Gills should be bloody.

5.) Flesh should be firm, slight pressure should not leave indentations in body.

6.) No sliminess on body or flesh.

7.) Avoid broken or torn portion cuts or whole fish.

8.) Live shellfish should be alive and moving when received.

9.) Mollusks shells should be closed tight.

10.) Temperature should be 35-40 degrees Fahrenheit.

11.) Should be iced and not sitting in liquid.

12.) If frozen, should be no sign of prior thawing and re-freezing and should not be freezer burned.

What should be examined when receiving seafood?

1.) Stored at 32-40 degrees Fahrenheit

2.) Stored on ice in a drip pan to ensure fish is not sitting in water.

3.) Wrapped, stored away from items that absorb odors easily.

4.) Should be dated and labeled.

5.) Shellfish must have shipping tags.

6.) All items rotated.

What are the storage procedures for seafood?

Fillet

A boneless slice of fish or meat.

Whole Cut

Fish is kept intact during cut with all parts attached, may be cut open for convenience and may or may not be scaled.

Steaks

Cross cut section of fish, will have bones in the center, will have skin on and will be scaled.

1.) Grade A - This is the best quality produced. The appearance and culinary quality are superior. Grade A products have a uniform appearance and are practically devoid of blemishes and other defects.

2.) Grade B - This is good quality, and generally, is suitable for many food service applications. Grade B items have significantly more blemishes and/or defects than Grade A seafood.

3.) Grade C - This grade resembles Grade B, but it is lacking in appearance. It is suitable only for finished menu items, such as soups and casseroles, where appearance is not critical.

What are the grades of seafood?

1 GAL=4 QTS=8 PTS=16 CUPS=128OZ

1QT=2PTS=4CUPS=32OZ=64TBL=192TSP

1PT=2CUPS=16OZ=32TBL=96TSP

1CUP=8OZ=16TBL=48 TSP

1OZ=2TBL=6TSP

1TBL=3TSP

1 LB=16OZ

1 LITER=1.05QTS 1KG=2.2 LBS

1QT=.95 LITER 1 LB=.45 KG

1 TSP=5 ML 1OZ=28.3 G

1G=1000MG 1L=1000ML

Be familiar with these conversions 🙂