5

Controlling Food Costs

in Purchasing

Inside This Chapter

Developing Purchase Procedures
Implementing the Ordering System
Improving the Ordering System

Chapter Learning Objectives

After completing this chapter, you should be able to:
Explain the purchase process and
determine who should make
purchasing decisions.

Describe the parts of a purchase

specification and of a purchase
order.

Describe the importance of par

levels and how to establish them.

Explain the importance of

maintaining an ordering system.

Explain different types of

purchasing methods and their
uses.

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Key Terms
acceptable substitutions,
p.119

order guide, p.130

quotes, p.117

par level, p.122

blanket purchase order,

p.135

perishable goods, p.121

sales representative,
p.128

perpetual inventory, p.123

specification, p.118

prime vendor, p.125

standing order, p.126

purchase order (PO),

p.123

supplier, p.117

buyer, p.116
invoice, p.133
nonperishable goods,
p.121

Case Study
Chef Bob Schmidt and Chef Linda Wiley were discussing Bobs new position
at the Polo Bistro restaurant during a recent Chef Association meeting. Chef
Smith had just moved to the area, and was hoping Chef Wiley could help with
contacts for vendors and suppliers.
Foodservice Meats and Betty Poultry are two very good sources, Linda said.
I use B&B Broadline Suppliers for most of my goods.
What about local produce or specialty houses? asked Bob.
My sales guy with B&B takes good care of me, and I really look forward to
baseball tickets he gives me each year, Linda replied. So, I dont really shop
around much. Besides, she said in a low voice, the chef before you used
onlyB&B.
1. Chef Smith has an employment contract that includes a bonus if he meets
specific food cost targets. Should he be concerned that B&B has had a
long-term vendor relationship with the Polo Bistro? Why or why not?
2. Do you think that the salesperson with B&B Broadline Suppliers
believes his accounts are partnerships? Explain why or why not?
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CHAPTER 5 Controlling Food Costs in Purchasing

Exhibit 5.1

Developing Purchase Procedures

Purchasing is one of the key areas in the cost control process of the restaurant
and foodservice industry. When a customer orders an item from the menu, he
or she has certain expectations. If size, shape, color, grade, or portions are
mentioned, then those food characteristics are what the customer should
receive. The person responsible for purchasing items for the operation must
be aware of these customer expectations and procure exactly what is stated on
the menu (see Exhibit 5.1).
In addition to the correct item, the buyer must also purchase the correct
amount. If too many goods are purchased, not only is the operations
capital tied up in inventory, but if the goods are perishable, they might
spoil. This is one way for operations to lose money. However, if too few
goods are purchased, there is the danger of running out and disappointing
guests. Purchasing, like every other section in the operation, is an area
where costs can get out of line. Controls and procedures must be instituted
to prevent this from happening. The purchasing procedure consists of the
following steps:
1. Designating a purchasing person
2. Determining which products to buy by establishing product
specifications
3. Estimating how often and how much to order
4. Choosing purchasing methods based on organizational needs
5. Selecting vendors

Buyers select the food

needed to produce
menu items that satisfy
customers expectations.

Who Should Buy

The first step in the purchasing process is designating who will do it.
Itcould be one or several people, depending on the size of the operation.
Invery large restaurant or foodservice operations such as major hotels,
hospitals, and college foodservices, a purchasing agent will do the buying.
In smaller operations, it could be the general manager, production
manager, or chef. Regardless of who does it, this person is referred to as
the buyer and is the sole person responsible for purchasing particular
goods.
While the buyers responsibility may be shared, clearly designating who will
be the buyer for which items eliminates confusion and minimizes the risk of
running out of a product or having too much of it on hand. For example, in
a larger operation, the chef might purchase meat, seafood, and produce,
while the sous chef orders dairy, baked goods, dry goods, and supplies.
Although two people are purchasing, only one person is the buyer in each
category.

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Developing Purchase Procedures

Buyers need to possess a variety of skills:

Exhibit 5.2

Balanced communication skills: They must be able to listen to

the needs of stakeholders in their operation (Exhibit 5.2),
including the preparation staff, accounting staff, receiving and
storing staff, ownership, and management. They must also be
able to articulate those needs to vendors.

Excellent math skills: Math is basic to all of the primary

functions of the buyer and storeroom staff: buying, receiving,
storing, and issuing.

Computer skills: Computers are widespread in purchasing.

Tracking inventory is the heart of control and purchasing, and is
mainly done with computer software.

Product knowledge: Buyers can develop their food knowledge

by spending time at trade shows, farmers markets, and food
distributors warehouses. Attending food shows is an efficient
way to keep up on the latest food and equipment developments.
While it is common for managers to delegate purchasing, it is extremely
important that the person selected to purchase products is trained and
knowledgeable about the subject. Only by following correct purchasing
procedures and having controls in place can the establishment get the right
item at the right price. For this reason, if the manager is going to delegate this
responsibility, it must be passed on to someone who has been trained in the
operations purchasing procedure.

What to Buy
To know what to purchase, a buyer must work with a number of variables.
The buyer needs to know the growing seasons for produce and that beef
prices are lower in the spring than in the fall. The buyer must be familiar with
varieties, grades, and forms in which the products can be purchased. And the
buyer needs to be able to judge if a distributor quotes, or offers, a fair price.
An experienced buyer can read the market for signs of supply, demand, and
price fluctuations and does not rely on supply-and-demand information
received from suppliers. Suppliers, also called vendors, are the companies
that provide products purchased for use in restaurant and foodservice
operations. Some examples for products provided by suppliers are meat, dairy,
vegetables, fruit, utensils, and paper products.
The buyer also needs to organize product specifications by vendor. That is,
products that will be ordered from the same vendor should be grouped
together. The buyer must also have a working knowledge of grading
terminology, labeling terms, and standards used to judge quality. A buyers
responsibilities go beyond getting the best price and ensuring that sufficient
quantities are available; standards of quality must be upheld as well.
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CHAPTER 5 Controlling Food Costs in Purchasing

Think About It . . .

Managers may be primarily

concerned with sales, which
can lead to overlooking the
importance of purchasing.
What are some of the
consequences of poor
purchasing procedures for
customers?

Product Specifications
The second step in the purchasing process is determining which products
to purchase by establishing product specifications. Because there is such a
wide variety of food available, the specification (or spec) is an important
control device. Through this device managers set policy as to which brands,
grades, and variety of food products will be ordered for the operation. A
specification ties together what is written on the menu and what is called
for in the standardized recipe. It also controls the purchasing and receiving
procedures.
Everyone uses specifications in their everyday lives. If someone wanted to buy
some clothes, for example, he would have a specific size, preferred style, and
color in mind. In contrast, the specifications used in the restaurant and
foodservice industry are much more formal.
A specification explains or describes the desired product name, its intended
use, grade and size, and other product characteristics. It also includes general
instructions regarding delivery, payment procedures, and other pertinent
data. Basically, it tells the supplier exactly what the buyer wants. A
specification should be documented so that both the buyer and the supplier
are clear on the buyers purchase requirements.
Managers, with input from the chef or production manager, must write the
specifications for all the food needed to produce the standardized recipes of
the menu items. It is important to match product specifications to the desired
use. One example of a mismatch might be ordering Grade A tomatoes for
spaghetti sauce, when Grade B tomatoes would suffice and save the operation
money. Large operations typically write formal specifications; smaller
operations might use verbal specifications. A detailed formal specification
includes the following information:

Product name
Intended use: the component of the standardized recipe the item will be
used to make

Grade: U.S. Department of Agriculture (USDA), brand name, trade

association endorsement

Product size: could include portion size; weight ranges for food items
such as roasts, ribs, whole chickens, or whole fish; size of produce

Packaging: size of pack, type of packaging material

Product characteristics: color, amount of trim, type of preservation,
degree of ripeness, point of origin

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upon by both buyer and vendor

General instructions to bidders: Restaurant and foodservice

establishments receive bids from several vendors on the same product in
order to purchase at the best possible price. These vendors are competing
with each other for the operations business.
To understand the importance of clear specifications, imagine if a buyer were
to order simply a case of fresh apples from a produce company. The
company could possibly ship any type of apple. Purchasing the correct fresh
apples requires buyers to know the following:

What is the intended use? Are the apples for baking, puree, or eating
raw? Red Delicious apples are among the most popular apples, but they
are the wrong variety for cobbler, pie, or applesauce.

What are the grade standards? Do they need to be U.S. Fancy or

U.S.No.1?

What varieties are available? Produce companies may carry as many as

18 to 20 different varieties of apples.

How are they packed, by count or by weight? Generally, vendors refer to

apples by count. The higher the number of apples per case, the smaller
the apple.

for Bus

ess
in

Acceptable substitutions (or equal): substitutions previously agreed

Open

Developing Purchase Procedures

Whats the
Footprint?

In recent years, many

operations have turned to using
locally sourced products on their
menus. Using locally sourced
products can have several
advantages:
1. Restaurant and foodservice
operations are supporting the
local economy, which
improves stakeholder
relationships.
2. Using terms such as farm
fresh or locally grown on
menus is a great marketing
tool, which helps increase
sales.
3. Local products travel shorter
distances, and may reduce the
environmental impact
associated with long-distance
shipping.

When are they in season? Most apples are available year-round, but some
varieties, such as Gravenstein, are seasonal.

Are there any additional considerations? Should the apples be organic?

Should they be fresh cut in order to reduce labor costs and waste? Should
they be unwaxed?

Should they be sourced locally, and if so, what is the distance they may
be shipped?
A specification for apples might look like Exhibit 5.3.
Developing quality standards is time-consuming and
tedious. It is also one of the most important ways to
consistently get the quality desired by any operation.
Tools exist to help buyers and managers develop
specifications, such as The Meat Buyers Guide,
published by the North American Meat Processors
Association (see Exhibit 5.4 on the following page).
Specifications identify exactly what the buyer should
purchase.

Exhibit 5.3

Product Specification
Type: Apple

Water content: 85%

Variety: Fuji

Cultivation type: Organic

Maturity: 100%

Grade: Fancy

Weight (lb): 1013 oz

Color: Red

Style: Fresh

Packaging: Cases (15-lb)

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CHAPTER 5 Controlling Food Costs in Purchasing

Exhibit 5.4

Product Substitutions

Acceptable substitutions (or equal) are an important part of

purchasing specifications. An operations vendor may
experience shortages or outs, which is a product that has
not been delivered. Establishing acceptable substitutions, or
equal, allows the vendor to fulfill an order with previously
agreed-upon substitutions. Vendors can do a thorough review
of the products an operation uses and provide the buyer with
other options. Substitutions also help the buyer. For example,
fresh seafood fluctuates in price. Allowing the buyer to
purchase an acceptable substitute can result in a lower price.
Once the specifications are written, they are circulated to
suppliers to determine which suppliers will provide each
product. Acceptable substitute products should be written
into the specifications. In addition to the supplier,
specifications are used by the buyer, the receiving clerk, the
kitchen, and accounting. Remember, specifications are an
internal communication tool, as well as one for outside
vendors.

How Much and How Often to Buy

The third step in the purchasing process is estimating how often and how
much to order. This is also one of the controls in purchasing. Consider that
the act of purchasing costs money, not only in product, but in organizational
costs as well. It takes time and labor to receive bids, complete purchase orders,
phone in or electronically transmit orders, receive the goods, store the goods,
and pay the invoices.
To obtain the best prices for products and to decrease the time spent on
researching prices, restaurant and foodservice operations often use a bidding
process. The first step in bidding is a request for proposal (RFP) that is
prepared by an establishment. An RFP is a document that shows the amount,
variety, and specification of products that an operation needs. The RFP is
distributed to solicit bids from suppliers, who then can submit their bids or
proposals to an operation. Then the manager selects the bid that offers the
best prices for the desired specifications. The bidding process is important,
but can be time-consuming to both the operation and the supplier.
Every time a suppliers truck stops, the costs to the supplier, and consequently the
restaurant or foodservice operation, go up as well. It would stand to reason, then,
that less-frequent orders would be best for the organization. However, this is not
always true for two reasons. First, if fewer orders are being placed, the inventory
level must be higher. High levels of inventory tie up cash, not only in the cost of
the food but also in the cost of the storage space. Storage space, while necessary,
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Developing Purchase Procedures

does not generate sales, costs money to build and maintain, and may take
space away from other functional areas such as dining space. In addition,
some storage, such as cold storage, requires cooling and ventilation
equipment that runs on electricity, thereby increasing utility costs. All of
these costs associated with storage space must be covered by the sales
brought in by the operation. Finally, some goods cannot be stored for an
extended length of time and may need to be ordered frequently.
Consequently, the buyer needs to create an order guide that identifies
vendors that best satisfy the needs for specific products.

Exhibit 5.5

To optimize the timing of purchases, goods are broken down into two
categories. Perishable goods are products that have a relatively short shelf
lifeusually one to three days, as shown in Exhibit 5.5. Some perishable
goods might last a few days longer, but their quality and yield may be
considerably diminished. Perishable goods should be purchased as often
as possible. In larger restaurant or foodservice operations, perishable
goods could be purchased daily. In smaller operations, purchasing
perishable goods every two to three days is considered reasonable.
However, even smaller operations should not put off purchasing
perishable goods such as cream and milk longer than three days.
Nonperishable goods are products that have a relatively longer shelf life.
Nonperishable goods can last for a few months to a year if stored and
handled properly. Nonperishable goods should be purchased as seldom as possible
for reasons previously given. The size of the storage area, the operations cash flow,
and location such as urban versus rural are all factors that the buyer must consider
when determining how often to order nonperishable goods. Some operations
purchase nonperishable food weekly, some bimonthly, and others monthly.
Determining Product Usage

Every server dreads having to tell a guest, We just ran out of the filet mignon
about 10 minutes ago. Would you like to try the red snapper? With guest
expectations increasing every day, managers cannot afford to disappoint them
on any level. Purchasing the correct amount of product at the correct time for
the correct price is the goal of every restaurant or foodservice manager.
These are the steps used in accurately estimating the amount to purchase:
1. Determine the amount of product needed until the next delivery.
2. Check inventory to determine what is on hand.
3. Subtract what is on hand from the amount needed and add 5 percent as
a safety measure.
4. Use the result of this calculation as the amount to purchase.
By following this method, the operation is assured of having the right amount
of the freshest product available for service to the customer.
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CHAPTER 5 Controlling Food Costs in Purchasing

Think About It . . .

Restaurant and foodservice

operations use hundreds of
products in food preparation.
Many of these products have
different packaging, reordering
levels, and ordering frequency.
Why?

Exhibit 5.6

As purchased (AP) amount and edible portion (EP) amount also come into
play when determining how much to purchase. These are covered in depth
inchapter 3. Because most products will lose volume when cooked, for some
managers EP becomes as served (AS), which is the amount available to serve to
the customer. In this book, the term EP is used and it includes cooking loss.
Establishing Par Level

Today in the restaurant and foodservice industry, the most common method
used for determining the quantity of nonperishables to purchase is the par
stock method. Par level means an operation has enough
stock on hand to get the kitchen through until the next
order is delivered. This method works well in operations
that have a relatively steady flow of business and a menu
that does not change frequently. The key to this method is
assigning a level that should be constantly on hand to
every item in the storeroom. When it is time to order,
inventory the item as shown in Exhibit 5.6 and subtract
that count from the par level. The resulting number is the
amount to order. Par levels are normally created using the
counting unit for the product, such as 100 pounds of
onions or two cases of frozen green beans.
For example, an establishment famous for its fried
chicken serves green beans seasoned with smoked ham
chunks and onion as one of its side dishes. It uses 1 case
of canned green beans each day, except on Saturdays
and Sundays when it uses 2 cases per day. Therefore, its
usage is 9 cases a week. The manager has decided to add
a safety factor of three cases. Consequently, its par stock for green beans is
12cases. The operation receives a grocery delivery weekly. When taking
inventory of the green beans, the manager finds 4 cases on the shelf. She
subtracts 4 cases (stock on hand) from 12 cases (par level) and orders
8cases of green beans:
12

8
Cases par level
Cases in stock
Cases to order
To determine a par level, follow these steps:
1. Determine the amount of time between deliveriesfor example, daily,
weekly, bimonthly, or monthly.
2. Determine the estimated amount used during this period. This should
be done for each item in the storeroom.
3. Add a safety factor to cover any unexpected sharp increases in business
or to cover the possibility of shortages from the supplier.

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Developing Purchase Procedures

4. Add the estimated amount of product used and the safety factor
together to get the par stock.
5. Set par levels for all ingredients and supplies so that they can be easily
tracked and nothing is overlooked. Adjust pars by season, and order
enough to get through the next delivery, not just until the next delivery.
6. Include the par level numbers on the order guide and place a label with
the amount on that items shelf in the storeroom.
In larger operations, such as a hotel food and beverage department, requisitions
are used to retrieve items from the storeroom. In this case, the storeroom manager
has a spreadsheet called par sheet for every item in the storeroom and subtracts
the requisitioned amount from the inventory on the spreadsheet. When placing
an order, the manager looks on the par sheet to determine the quantity currently
on hand. This is known as a perpetual inventory and is used rather than taking
a physical inventory. Then the manager looks at the par sheet, which shows the
quantity the operation currently has in inventory and the quantity the operation
wants to have on hand to get it through until the next order. A sample par sheet
for twice-weekly orders is shown in Exhibit 5.7.
Exhibit 5.7

Sample Par Sheet

Monday

Thursday

Monday

Thursday

Meat

Unit

Supplier

Par

Inv.

Buy

Par

Inv.

Buy

Par

Inv.

Buy

Par

Inv.

Buy

1. Prime Rib

Each

Chef Meat

2. Duck

Each

Betty Poultry

3. New York
Strip Steak

Each

Chef Meat

24

18

48

12

36

24

20

48

40

4. Beef Patties

Case

Chef Meat

5. WOG
Chicken

Each

Betty Poultry

36

32

48

40

36

30

48

41

There are also software programs available that use the perpetual inventory
approach to the par level method of ordering. These programs can be used for
large and small operations alike. Some of the more sophisticated programs are
tied into an operations point-of-sale (POS) system. When a customer orders a
menu item, the software calculates the food used in preparing that menu item.
The relevant product is automatically taken out of the inventory. When the
inventory drops to a predetermined level, the software subtracts the amount
on hand from the par level quantity and generates a purchase order (PO) for
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CHAPTER 5 Controlling Food Costs in Purchasing

Exhibit 5.8

that item. A purchase order is a form issued by the buyer

and sent to the vendor that indicates the items and
quantities to be purchased.
For example, when a customer orders a hamburger
(Exhibit5.8) and the server enters the order into the POS
system, one hamburger bun, four ounces of ground beef,
three pickle slices, and one-quarter ounce of ketchup are
subtracted from inventory. As more hamburgers are ordered,
more of these ingredients are subtracted from inventory.
When the inventory for ground beef drops to a predetermined
level of 50 pounds, the program subtracts the available
50pounds from the par level of 150 pounds, and generates a
purchase order for 100 pounds of ground beef.
Unfortunately, fully automated systems have one real
drawback: Someone has to enter the information, and keep
itup to date. This has a time and labor cost associated with it, sometimes a
significant one. Either the programmers or the server must account for menu
substitutions, which are products that are different from those that are
ordered regularly, or the numbers will be off. For instance, if a customer
substitutes a side order of baked potatoes with coleslaw, the server needs to
reflect this substitution in the POS system. Any changes in the menu will also
need to be programmed, including daily specials. Many large chains do use
their POS system to generate order replenishment; however, the majority of
those are quick-service restaurant chains with limited menus that do not
change often.

How to Purchase
Once an operation knows what to purchase, managers need to know how to
purchase those items. Step 4 of the purchasing process is choosing purchasing
methods based on organizational needs. There are various ways to purchase
products, and some are more economical than others, which contributes to a
lower food cost. However, some are misused and end up costing the
organization money. Effective purchasing procedures should include a
consideration of purchasing methods required by the vendor and the effect of
these methods on the organization. Employees responsible for ordering
should be trained about several aspects such as deadlines when purchase
requests need to be submitted, ordering frequency, and order minimums
required by each vendor.
Defining Organizational Needs

Before managers decide on the purchasing method, it is best to define the

organizations needs. This allows vendors to customize a purchasing program
that makes sense for the specific business. For example, some operations may
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Developing Purchase Procedures

choose to use a prime vendor, which will provide most of the operations
goods. Managers should examine:

Level of service needs: Does the sales representative need to meet with the
buyer each week to take an order? Or can the buyer order online, via fax, or by
a phone call? Based on space and storage limitations, does the operation need
frequent deliveries or will one delivery per week work? If the operation requires
a high level of service, is there an additional cost associated with that level?

Quality specifications needs: Will the operations concept allow the

buyer to purchase the majority of meat, seafood, produce, and so on
from a broadline distributor that provides multiple products such as
meat, produce, food supplies, and utensils? Or does the operation need
a dedicated supplier for specific products?

Prime vendor relationship needs: Does the operation do enough volume

to increase the primary vendors drop sizeminimum amount that a
supplier can deliverfor the establishment, thereby making the operation
a more profitable stop for the vendor? Will the efficiencies the vendor
gains be passed along to the operation in the form of lower prices?
Purchasing Methods

Once the organizational purchasing needs have been defined, managers can
determine which purchasing method will work best for their operation. Most
operations will use one or more of the methods shown in Exhibit 5.9.
Exhibit 5.9

Purchasing Methods
Commissary

Chain
operations

Large foodservice units such

as schools, hospitals, government agencies

Chains and
franchised
operations

Purchase 100%
of product
line from one
purveyor

Amount
needed for a
period of time,
usually a year

Paper supplies
printed with
company logo;
purchase 100%
ofsupplies

Lowest bid

Efficient;
customized
supplies

Bakery, coffee,
dairy products

Detailed specs

Operation specs;
Par level; must
parlevel
show manager
what is removed
and brought in

Lowest price

Keeps stock
levels even

Lowest
Delivery costs reduced
with one truck stopping; possible price
purchasing online

Lack of specs could

lead to lesser-value
shipments

Abuse by
delivery
person; food
cost goesup

If supplier is out of item,

no backup purveyor;
supplier may not offer
lowest prices

Pros

Primary Use

Sealed Bids

Independent
establishments,
smaller operations

Cons

Independents
andchains

Cost-Plus

Requirements

Competitive Quotes Standing Order Prime Vendor

No competition Delivery times

need to be
between
negotiated
bidders

Often owned by
parent company of
restaurant chain;
conflict of interest

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Competitive Quotes This is a common purchasing method used by

independent establishments and smaller operations. The buyer completes a

market quotation sheet with the items and item specifications that the
operation needs. This sheet is a standardized form that is given to two or
more suppliers who are then asked to provide a price quote for the items
needed. The quotes are analyzed, and the order is then placed with the chosen
supplier. For this method to be successful, specifications must be established.
If they are not, then anything could be shipped and not necessarily be the best
value for the restaurant or foodservice operation. If specifications are used,
the lowest price would be the best value because all suppliers are bidding on
an identical product.
Standing Order This method is used primarily for bakery, coffee, and dairy

products, and particularly for perishable items and for linens. In this
purchasing method, the vendor works closely with the establishment to
replenish stock on a regular basis. This method is quite satisfactory as long as
the supplier removes the unused stock and gives proper credit. If proper stock
rotation does not occur, the operation is using product that is not as fresh as it
should be, which could result in substandard product. For the standing order
method to be successful, the delivery person needs to show the manager the
items being removed and those being brought in.
Prime Vendor This method, also called the one-stop shop, is becoming the

most popular in purchasing goods today. It involves purchasing most, if not

all, of an operations goods from one supplier. Independent managers and
chains both use this method. It came about when restaurant and foodservice
suppliers began merging with meatpackers, produce houses, bakeries, and
dairies to form giant super-suppliers. In theory, it works well. Delivery costs
are reduced with one truck stopping instead of several. Purchasing can be
done online with the operations specifications and par levels loaded into the
program. The downside of this method is that if the supplier is out of
something, the operation may not have a backup supplier for that item. Also,
because the buyer relies on a single suppliers pricing rather than getting price
quotes, the pricing might not be the most competitive for the restaurant or
foodservice organization. Managers should make sure that audit privileges are
included in any prime vendor agreement. This will serve as the compliance
check. Managers should clearly understand how a distributor defines costs,
and must be aware if there are additional charges incurred for splitting cases
or for stocking proprietary products. Finally, managers should make sure
there is an escape clause in the agreement.
Cost-Plus This method is used primarily by chain operations, as

independents do not have enough volume for suppliers to offer it to them. In

this method, the chain purchases 100 percent of a particular product line, like
meat for example, from one supplier. That vendor sells the product at the
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Developing Purchase Procedures

vendors invoice price plus an agreed-upon percentage for handling, delivery,

and the vendors profit. Although this system could be used in conjunction
with a one-stop shop, it most often is used with several sources; for example,
one source for meat, one for produce, one for dairy, one for groceries, and so
on. Chains that use the cost-plus method of purchasing are normally paying
the lowest possible price for their goods even though the vendors do not bid
against each other.
Sealed Bids Large foodservice units such as schools, colleges, hospitals, and

government agencies primarily use sealed bids. In this method, foodservice

operations calculate the amount of a product such as dairy that they will need
over a period of time, normally a year. Then suppliers will bid on that
amount. Usually, the lowest bidder is selected as the supplier for that product.
The supplier delivers the entire order amount at one time, or spreads out the
deliveries over a specific time period at the agreed-upon price for the duration
of the contract. If the price of the product goes up, the vendor must sell at the
lower agreed-upon price.
Commissary This method is used almost exclusively by chains and

franchised units. Quite often 100 percent of that operations supplies will
come from the commissary. In the commissary method, orders from
individual units are consolidated. The commissary then purchases the
consolidated quantity from the preferred suppliers. Normally these products
include refrigerated, frozen, or packaged premade items that are produced to
the companys standards. For instance, some chains may have a commissary
where dough is prepared and then distributed to individual stores. Any paper
supplies printed with the companys logo will also come from the commissary.
Frequently, the commissary is owned by the parent company of the chain or
franchise.

Vendor Selection
The fifth and final step in the purchase process is selecting vendors. The chef
or purchasing manager knows what to buy, when to buy it, and in what size
and packaging. The manager has decided on the method used for purchasing.
Once these variables are known, the purchasing manager must decide from
whom to buy the product. This begins by compiling a list of all of the
reasonable potential suppliers that meet the operations needs. Management
may then begin to shorten it into an approved-supplier list by reviewing each
suppliers quality, consistency, variety, and price. These will then be ranked
according to the type of establishment being run, the menu being served, and
customer expectations. Consistency in quality, delivery time, and labeling are
also important factors when choosing a vendor. And finally, managers should
consider using Hazard Analysis Critical Control Point (HACCP)engaged
vendors. HACCP is a system used to control risks and hazards. If a customer
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has an issue with an operations food, having only HACCP-approved vendors

that can share liability is critical. The best suppliers work as partners to
reduce costs, maintain quality, and ensure guest satisfaction. It is in their best
interest to help their customers businesses grow.
Choosing a Vendor

The criteria for vendor selection should always include quality, price, and
service. Managers should ask for references and check them out by talking to
other restaurant and foodservice operations. Managers need to treat the
supplier like a prospective employee. Is the vendor rep motivated? Is he or she
passionate about the work? Is the vendor rep conscientious and dedicated to
making the partnership work?
Managers should meet with the sales manager and the sales representative,
the suppliers salesperson who would be assigned to the operation. If possible,
visit the prospective vendors business. Tour the warehouse. Look for an
organized, clean storage space, free of debris and litter. If it is a seafood, meat,
or poultry vendor, check out the cutting and packing room. Walk through the
coolers and freezers. These vendors should meet all regulatory requirements,
and the area should be clean and sanitary. The best suppliers will welcome
interest in what they are selling and how they are handling the product. Often
vendors believe that their high operating standards are a point of difference
from their competitors.
Once vendors have been identified, it is essential to establish operational
ground rules, such as the companys delivery days, drop size, minimum
order amount, payment terms, and the cutoff times for ordering for the
next day. Buyers need to establish a delivery window, such as 8 a.m. to
10a.m. or 2 p.m. to 4 p.m., with no deliveries during peak times such as
lunch service. Managers will need to review ordering specifications and
any other key information that needs to be shared with vendors. Once
both parties have agreed to terms, it is very important to keep to the
bargain.
Maintaining Positive Vendor Relationships

Restaurant and foodservice operations and their suppliers are critically

dependent on each other. However, too often one party has little empathy for
the other. Managers deal with a continuous stream of changing prices,
quantity and quality, late deliveries, or drivers showing up at peak times. On
the other hand, some managers treat suppliers very poorly. They may be rude
to delivery drivers, or abuse the sales representatives and run them ragged
with last-minute, high-priority demands. Or managers may ignore the invoice
terms and pay when they feel like paying.

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Building a positive relationship with vendors is more important now than

ever. As companies merge into larger distributors, the selection of vendors
continues to shrink, making it very hard to find new options if a manager is
not happy with a current vendor. Consequently, it is important to view
suppliers as partners in the business. However, vendors should also remember
that a given restaurant or foodservice operation is their customer. That is, if
management of an operation is not happy with a vendor, they may pursue
another vendor that better serves the companys needs.

Implementing the Ordering System

Every restaurant and foodservice operation needs an effective ordering
system. Proper ordering procedures help keep fresh product in stock.
Ordering too much of a product simply because the kitchen keeps running
out may result in product that is past its prime. Management does not want
excess inventory, which may increase waste, allow for product theft, and
encourage overproduction. A proper ordering system helps ensure that the
amounts purchased make culinary and financial sense.
Better ordering control can also keep cash from being tied up in excessive
inventory levels. Too much physical product kept in storage means less cash
available for the operation as a whole. That is, operations with lighter
inventory may have available cash to spend on other things such as new
menus, laundering linens, and so forth. It is recommended that inventory
levels for food products turn over from four to six times a month. For
example, if an operation spends $25,000 per month in food purchases, then
the food inventory value should range from a low of $4,166 to a high of $6,250
at any given moment within that month. These formulas show the
calculations:
$25,000
Food
cost

$4,167
Turnovers per
Inventory value
month (high)
(low range)

$25,000
Food
cost

$6,250
Turnovers per
Inventory value
month (low)
(high range)

Compare that with an inventory that turns over only three times a month
because the operation has purchased too much:
$25,000
Food
cost

$8,333
Turnovers
Inventory value
per month
(excessive)

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This would result in an inventory value of about $8,333 and a negative cashon-hand difference of $2,083 to $4,167:
$8,333

$6,250
Inventory value
Inventory value
(excessive)
(high range)

$8,333

$4,166
Inventory value
Inventory value
(excessive)
(low range)

$2,083
Cash-on-hand
difference (low range)

$4,176
Cash-on-hand
difference (high range)

The Order Guide

It is critical in tough economic times to combat rising costs. One tool for this
is the consolidation of purchasing. Consolidation results in greater buying
power with suppliers, which results in lower overall costs. Reducing the
number of delivery trucks arriving will also result in staff spending less time
ordering and receiving products.
To facilitate this process, an order guide should be used by all employees
involved in ordering products for an operation. The order guide form is a
tool for counting and tracking all the products an operation uses and must
reorder. It should contain all or some of the following information:

Item description: The description should be brief but identifiable.

The pack and size may also be shown in the description. It is
recommended that managers use the description that is on the
vendors invoice. For example, the order guide might say only Beef
Cubes for Stewing. But the specifications have already been
established as USDA inspected select or better. 11 cubes, fairly
uniform in size and shape; fat trimmed, fat not to exceed , all
gristle and connective tissue removed. Packed 5/10 lb or 4/5 lb, poly
packages, inside NSF approved boxes.

Pack and size: The pack means the number of units in the case, box, or
carton. The size describes the type of container or weight of the product.
In the previous example, it shows that the stew meat is delivered in either
five 10-pound poly packages (50 pounds) or in four 5-pound poly
packages (20 pounds).

Purchase unit: The purchase unit represents the unit of measure that
the price is based on. Some items are sold and delivered by the case.
Items like meat, seafood, and some produce can be priced by the pound
but delivered in cases. The stew meat would be priced by the pound but
sold either in 50- or 20-pound cases.

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Count unit: It is not always feasible to use the delivery or purchase unit
when counting product for inventory and reorders. Canned goods, for
example, are often sold in a case of six #10 cans. The cases are opened
and the cans stored on shelves (Exhibit 5.10). So counting the number of
cansmakes more sense than calculating the number of cases.
Exhibit 5.10

Price: The price column is used to show the current purchase price of
items. The price should be updated as often as necessary.

Vendor: This column shows the preferred vendor for each product.
Vendor item code: If possible include the vendors item code. This helps
ensure the correct product is ordered and reduces mistakes.

Par level: As noted earlier in this chapter, par level indicates the quantity
the operation wants to have on hand to get it through until the next
order so that it can be checked against inventory. It is important to note
that when products are ordered weekly, managers need to place an order
that will carry the operation through the next delivery, even if current
inventory is above established par level.

Order history: Include as much order history as the form will allow.
This allows managers to adjust the pars if necessary. At least three weeks
of history is recommended to get an accurate product usage.

Usage rate: As an alternative or a supplement to order history, some

operations may prefer to establish a usage rate, which is a number or
amount of items used in a given period, in order to ease the ordering
process. This is because historical usage rate may sometimes prove more
reliable than order history.

On-hand count: Before an order quantity can be determined, an actual

count must be taken to know how much product is on hand.

Think About It . . .

The order guide is a critical

document in purchasing. What
if restaurant and foodservice
operations had no order guide
and tried to simply purchase
products as needed? What would
the consequences for such an
approach be?

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It is essential that the order guide show par levels, on-hand count (beginning
inventory), and amount that needs to be purchased. As noted, when ordering
frequency is weekly or biweekly, managers need to carefully analyze both
order history and sales history in order to determine the amount that needs to
be ordered.
As can be seen in Exhibit 5.11, duck is normally ordered on Wednesdays.
Even though the establishment has established daily par levels, the
manager still needs to estimate weekly sales of duck for the establishment.
This is because the operation places its order once per week. After
analyzing weekly sales for duck, the manager finds that the operation goes
through 30 to 35 cases a week. As a result, on Wednesday the manager
places an order of 36 cases. On the other hand, when products are ordered
daily, weekly sales history may be less critical. This is because if the
establishment runs out of prime rib, say on Thursday, the manager needs
to order six pieces of prime rib on Friday.
Exhibit 5.11

Sample Order Guide

Department: Meat

Month____________
Date:

Each

$48.00

1 each

Daily

Betty Poultry
Duck: 4 ct, 1 cs
Each
New York
Strip Steak:
12 oz each

$24.00

1 each

Weekly

Chef Meat

Each

$8.50

1 each

Daily

Chef Meat
Beef Patties: 10 lb
ground 80/20: lb
Case

$48.00

1 case

Weekly

Betty Poultry
WOG Chicken: 2 lb
Each

$3.75

1 each

Daily

Sat

Prime Rib,
Oven Ready

Fri

Chef Meat

Thu

Ordering
Frequency

Wed

Count
Unit

Tue

Supplier
Price

Mon

Item

Purchase
Unit

PAR

INVENTORY

BUY

PAR

10

10

INVENTORY

16

10

35

24

15

BUY

36

PAR

24

24

24

24

48

48

INVENTORY

12

24

12

BUY

12

18

18

18

24

36

PAR

INVENTORY

12

BUY

10

PAR

12

12

12

12

36

36

INVENTORY

12

12

10

34

BUY

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The Purchase Order

The order guide informs managers when a certain item needs to be ordered
and the amount that needs to be ordered. As a next step, managers prepare a
purchase order (PO), which is sent to the vendor (see Exhibit 5.12). Purchase
orders are legal documents that communicate the buyers intention. Because a
purchase order clearly spells out the conditions for the sale, it protects both
the seller and the buyer. If the buyer refuses to pay, the seller can sue for the
amount of the payment due using the PO as evidence. If it is a large or
complicated purchase, a seller may request that a buyer create a PO so that
both parties understand the transaction. An invoice, which is the receipt for
the items delivered, is another legal document that will reinforce the terms of
the purchase order. The buyer can match the purchase order to the invoice to
make sure that all of the items were delivered and prices are correct.
Exhibit 5.12

Sample Purchase Order

Case
Case

Case

Case

The purchase order is a primary control used throughout the purchasing,

receiving, and payment process. Even small operations should consider using
some form of purchase order. One of the benefits of ordering products
electronically, which is becoming increasingly common, is that after
submitting an order, the manager can automatically print out the PO or
receiving report to use at the back door. Managers can compare the prices
quoted on the PO with the prices actually charged on the invoice. Without a
purchase order system it is virtually impossible to verify prices, which means
a manager is at risk of losing money if the invoice price is higher than the
quoted price because of a mistake or oversight.
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In other words, without a PO, many things can, and usually do, go wrong, as
shown in Exhibit 5.13. Here, the buyer ordered 100 pounds of beef tenderloin
at $9.50 per pound. The supplier shipped 200 pounds. The receiver, not
knowing what the buyer ordered, signed for 200 pounds, which was the
quantity on the invoice. Without a purchase order, accounting paid the
suppliers invoice for 200 pounds of tenderloin at $11.00 per pound. What do
you think happened to this operations standard food cost for this month? It is
important that the receiving person always checks in orders using the PO and
not the invoice.
Exhibit 5.13

PROBLEMS WITH LACK OF PURCHASING CONTROL

100lb of beef
tenderloin are wasted.

Buyer orders 100lb

ofbeef tenderloin at
$9.50/lb.

Shipper sends 200lb

of beef tenderloin.

Receiver signs for

200lb, which is on
invoice at $11.00/lb.

Accountant pays
$11.00/lb instead
of$9.50/lb.

Preparing the Purchase Order

A purchase order specifies the products to be purchased, their price, their delivery
date, and other important information. It includes the following features:

Unique number to identify the purchase order

Name of the ordering restaurant or foodservice operation, with address
and phone number

Date of the order

Signature of the person placing the order
Suppliers name, address, phone number, and contact name
Date of delivery, terms of payment, and any special instructions
Each item to be purchased, the quantity and unit of the item, the items
unit cost, and the extended cost of the item

Total cost of the order

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A standard purchase order is usually used for companies with whom the
buyer does infrequent business. If buyers plan to frequently purchase products
or services from a seller over time, they often establish a blanket purchase
order. This type of PO allows the buyer to purchase a certain amount of
goods, usually indicated by a dollar amount, at the stated terms within a given
time period. This approach speeds up the purchasing process since a separate
PO is not needed for each transaction. The buyer merely needs to call the
supplier on the phone, send an electronic order, or submit a formal bid request
to place an order with the company. As items are purchased, the seller will
invoice the buyer for goods received. Blanket purchase orders are very
common among restaurant and foodservice managers and allow for the
immediate request and delivery of goods or services.
Submitting the Purchase Order

Advances in technology mean that today most orders are submitted

electronically. However, there may still be some suppliers that require phone
or fax orders. When placing phone orders, it is important to ask the supplier
to verbally confirm the items and quantity ordered. That way,
misunderstandings between buyer and supplier will be minimized. In
addition, the buyer will get confirmation of product availability. In some
situations, the buyer may ask the supplier to send an e-mail confirmation of
the order. When ordering by fax, the buyer should call or e-mail the buyer
and request an acknowledgment of order receipt. In some rare cases, the fax
machine of the supplier may run out of paper, which can cause order delays.
More and more suppliers use online ordering systems that show real-time
inventory availability. This is a great benefit for buyers because they can
immediately verify the availability of product. In addition, when an operation
places multiple orders with the same supplier online, the operation does not have
to deal with multiple paper copies of these orders. Also, when orders are received
electronically, the supplier does not have to manually record these orders into its
inventory system. By submitting online purchase orders, both the buyer and the
seller reduce the amount of paperwork and also save time and labor.

Improving the Ordering System

The ordering system should be taken very seriously because incorrect ordering
can result in food-production delays, excess inventory, or lower-quality meals
and dissatisfied guests. One of the main considerations in ordering is to
designate a person or position responsible for ordering. The responsible person
needs to review order sheets for different vendors periodically. He or she needs
to identify any past ordering problems and work with involved parties to
resolve them. The final step in the ordering system is to evaluate the success
level of remedies to ordering problems. Generally, there are three key areas
that can help improve the ordering system: record keeping, security, and
training. Each of the areas is discussed here in more detail.
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Exhibit 5.14

Record-Keeping Basics

Documents in the Purchasing Cycle

In all but the smallest restaurant and foodservice

operations, purchasing responsibilities are divided up to
gain stronger control. Coordination of the various
purchasing tasks is achieved using five basic documents,
as shown in Exhibit5.14:

Step 1:

Purchase Requisition

Step 2:

Purchase Order

Step 3:

Invoice

1. Purchase requisition: A par sheet or order guide is

used to assemble a purchase requisition for each
department or category.
2. Purchase order: A PO is created for each vendor.

Step 4:

Receiving Report

Step 5:

Invoice Approval Form or Stamp

3. Invoice: An invoice is prepared by the supplier and is

simply an itemized listing of the goods or service
delivered. Generally, a completed invoice with prices
and totals accompanies the shipped goods to the
receiving department. Often the supplier will
periodically send a statement of invoices to the
accounting department.

4. Receiving report: Since an operation may have multiple deliveries, a

receiving report is used to verify that the goods being received are the
goods that were ordered. The receiving report resembles a combination
of several purchase orders. The receiving report is used to check every
ordered item against the invoice for quality, quantity, weight, counts,
and so on. The vendor should issue a credit memo for any shorts or
returns. This should be stapled to the original invoice. This report
should be completed and sent at the end of each day to the accounting
office with accompanying invoices.
5. Invoice approval form or stamp: The accounting department will
match the receiving report with a copy of the original purchase
requisition, a copy of the purchase order, and the related invoice.
Everything is then compared and verified. The invoice prices should be
compared to the prices quoted and recorded on the purchase order. It is
recommended that this be done when the product is delivered as well.
The accounting department will also check the math on each invoice. If
everything is correct, the invoice is approved for payment. Some
organizations stamp the invoice or attach an approval form.

Security Concerns
Security begins with hiring trustworthy employees. In addition, by following
the five-step record-keeping basics, an operation can eliminate many security
concerns. Typical security issues may include paying a fictitious company,
reprocessing and paying an invoice more than once, making math errors on the
delivery invoice, or suppliers not issuing credit memos at the time ofdelivery.
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It is a fairly common practice for suppliers in this industry

to give gifts to managers, owners, and customers that
make purchasing decisions on their products. As buyers
build a positive relationship with suppliers, they may offer
items of their appreciation, such as tickets to a ballgame,
free boxes of ribs for the company cookout, or golf outings.
It is important that buyers and managers have honest and
transparent relationships with all sales representatives
(Exhibit 5.15). Smart managers understand that the sales
representatives are not their friends and that getting too
close to suppliers can be dangerous. This does not mean
managers should treat suppliers in an unfriendly manner;
however, it does mean that they always need to respect the
importance of keeping a business relationship first.

Exhibit 5.15

Every operation should have a straightforward and well-communicated policy

regarding whats appropriate and not appropriate to receive from suppliers in
the form of gifts. For example, some large retail stores bar employees from
accepting anything from a supplier, even a free cup of coffee. If they do, and
the company finds out, the employee can be terminated. If a manager suspects
someone is receiving kickbacks, he or she should check prices for any
excessive increases. Another control is having someone outside of purchasing
do some competitive bidding.
Another security issue managers face surrounds substitutions in orders.
Lower-quality substitutions can cost an establishment serious money if they
are not monitored at the time of delivery. Lower-quality substitutions could
reduce both product yield and customer satisfaction.
Theft is also a real issue for managers. To combat purchaser theft, managers
may want to rotate people out of the purchasing function occasionally.
Doing so can prevent buyers or people working in the purchasing
department from becoming so comfortable that they begin to engage in
questionable behavior. There can be a benefit to not having the same people
control purchasing decisions year after year. Additionally, buyers should
place orders only with vendors on an approved list, and the same person
should not do purchasing and receiving, since this eliminates any checks
and balances.
Finally, the purchasing process should be evaluated on a regular basis in
orderto:
1. Measure the extent to which current purchasing goals are being met
2. Improve the system to more effectively achieve future purchasing goals
and enhance performance

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Employee Training
Managers should always provide new employees with complete and thorough
training and an orientation to the departmental policy and procedures. An
organization may want to consider using an order schedule, as shown in
Exhibit 5.16. The order schedule lists the vendors contract information and
emergency phone numbers. The order schedule can be organized by the
number of days each week that products are ordered and should result in a
more organized and thorough purchasing process. Information to prepare an
ordering schedule comes from the order guide. Use of this tool will quickly
get any new employees up to speed with the current ordering frequency of an
organization.

Exhibit 5.16

Sample Order Schedule

Supplier Information
PRODUCE COMPANY
Order method:
Order due by:

6:00 p.m.

MEAT SUPPLIER
Order method:
Order due by:
Emergency phone:

Tue

Wed

Thu

Fri

Sat

ORDER/
DELIVERY

ORDER/
DELIVERY

ORDER/
DELIVERY

ORDER/
DELIVERY

ORDER/
DELIVERY

ORDER/
DELIVERY

ORDER

DELIVERY

ORDER

DELIVERY

Sales Rep Name

Phone #
Fax #
Other

Emergency phone:

Mon

555-495-9000
Sales Rep Name
Phone #
Fax #
Other
Midnight
555-445-2145

SUPPLIER NAME
Order method:
Order due by:
Emergency phone:

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Summary

Summary
1. Explain the purchase process and determine who should make purchasing
decisions.
The purchase process involves five steps. First, the manager must designate
a purchasing person or buyer. The buyer is the sole person responsible for
purchasing goods for an operation. Taking this approach eliminates any confusion about what was purchased and when. Then the organization must identify what is needed to produce the menu and develop product specifications.
Order guides and par sheets tell buyers when and how much to order. Purchase
methods are chosen based on the specific needs of a given operation. Finally,
vendors and suppliers are identified and a preferred vendors list is established.
2. Describe the importance of par levels and how to establish them.
A par level is the amount of stock necessary to get the kitchen through until the
next order is delivered. Establishing par levels is of critical importance to restaurant and foodservice managers. This is because they have limited storage space,
some products have a short shelf life, and other products need to be served
fresh. In addition, by determining the amount that needs to be on hand at all
times, operation managers prevent customer dissatisfaction. When determining
par levels, managers need to consider factors such as historical sales of a given
item and the time it will take from placing the order until the delivery of goods.
3. Explain different types of purchasing methods and their uses.
There are different purchasing methods, and selecting a particular method depends on the size and type of an organization and the intend use of a product.
For example, the competitive bidding method is the most appropriate method
for small independent operations. On the other hand, chains prefer the costplus purchasing method. The commissary method works best for franchised
chains, whereas for perishable items such as dairy and fresh seafood, operations use the standing order method.
4. Describe the parts of a purchase specification and of a purchase order.
Managers write the specifications for the food needed to produce the standardized recipes, with input from the chef or production manager. Product
specifications should be appropriate for the desired use. Large operations typically write formal specifications; smaller operations might use verbal specifications. A purchase order (PO) is a form listing the products to be purchased,
their price, their delivery date, and other important information. It will also
show the total cost of the order.
5. Explain the importance of maintaining an ordering system.
A proper ordering system helps ensure that the amounts purchased make
culinary and financial sense. In addition to determining par levels and preparing order guides, operations need to adhere to record-keeping guidelines that
consist of five key purchasing and ordering documents. Developing strict rules
about receiving gifts from suppliers also should alleviate security concerns
pertaining to purchasing and ordering. Employees should be properly trained
about the ordering schedule. Excess inventory may increase waste, allow for
product theft or pilferage, and encourage overproduction.

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Application Exercise
Stormys Steaks and Seafood uses the following par sheet.
The manager needs to prepare an order guide for next
month, but first a par sheet for the next two weeks needs
to be completed. Lobster tails are ordered weekly on
Mondays, while rib-eye steaks and asparagus are ordered
twice a week.

2. The par stock for lobster tails is 14. How many

lobster tails need to be ordered each week?
3. The par stock for asparagus is 24 cases for Mondays
and 48 for Thursdays. Calculate the purchase
amount for both weeks.

1. Par level for rib-eye steaks is 4 on Mondays. Par

stock doubles on Thursdays. Calculate purchases for
Mondays and Thursdays for rib-eye steaks.
Par Sheet for Stormys Steaks and Seafood
Monday
(Week1)
Meat

Unit

Supplier

Par

Inv.

1. Rib-Eye Steaks

Each

Steakology

2. Lobster Tails

Each

Betty
Fisheries

14

3. Asparagus

Case

Produce
Products

24

Thursday
(Week1)
Buy

Par

Inv.
3

48

14

Buy

Monday
(Week2)
Par

Inv.

14

24

Thursday
(Week2)
Buy

Par

Inv.

Buy

48

11

Review Your Learning

Select the best answer for each question.
1. Proper purchasing involves
A. purchasing the highest quality available.
B. purchasing according to the specification at the
lowest price.
C. purchasing as much product as possible in any
given time period.
D. purchasing all goods from only one vendor.

2. When should perishable goods be purchased?

A. Every one, two, or three days
B. Every one or two weeks
C. Every day, no matter what
D. Twice a week

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Review Your Learning

3. What is par level?

A. The amount of an item ordered each week

7. Which purchasing method is used primarily by

franchised chains?

B. An item that an operation has on hand at all

times

A. Competitive bidding

C. The level that must be continually in inventory

from one delivery to another

C. Commissary

D. A purchasing method where each item has a

levelat which it is reordered
4. An operation uses one case of tomato sauce per
dayand has a par level of three cases. Orders are
made once a week. Today is order day, and there
arethree cases left. How many should be
ordered?

B. Prime vendor
D. Cost-plus
8. Which document is used before preparing a
purchase order?
A. Order schedule
B. Order guide
C. Order approval form
D. Standing order

A. Three
B. Four

9. An ordering system can be improved by

C. Seven

A. increasing storage space and par stock.

D. Eight

B. providing staff training about the order

schedule.

5. To whom is a purchase order sent?

A. The supplier
B. The front-of-house manager
C. The chef
D. New employees
6. The standing order purchasing method is best
suited for which product?
A. Lettuce and tomatoes
B. Fresh shrimp

C. paying cash for orders.

D. using fax orders only.
10. To bring new employees up to speed on the existing
purchasing process, an operation should use which
tool?
A. A point-of-sales (POS) system
B. An order schedule
C. A par sheet
D. An invoice

C. Heavy cream
D. Ground beef

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