The PAR stock, reorder point and safety stock and

the hospitality industry uses just in time

Jorge Yeshayahu Gonzales-Lara,
Sociologist, Marketing MA

The relationship between the order point and the safety stock ensures that your business does not
drop below your safety stock levels. A good level of safety stock means that your quantities
never reach zero in the event of the unexpected. Therefore, an order point is usually a little
higher than its safety stock level to account for delivery time.

Safety stock is the amount of inventory a company needs to have to achieve a certain level of
risk mitigation when it comes to stock. There are usually two types of inventory: core and
seasonal. The main inventory is an inventory that remains in stock throughout the year. Seasonal
inventory consists of products that you bring for a specific period, such is the case that
restaurants many of their products have a specific duration and is seasonal.

The order point is calculated using the safety stock metric. It tells you when it is time to place a
new order to replenish inventory, along with the minimum order and display the quantities. This
metric takes delivery time into account, helping companies avoid costly stocks.

Two metrics to keep in mind that help mitigate stock risk are safety stock and reordering point,
because stocks occur due to many reasons. We can highlight the following: inadequate,
ineffective, or inaccurate inventory and operations management practices, spikes in customer
demand, poor demand forecasting and inventory accounting, and disruptions to the production
process, as well as changes in supplier delivery times.

Security stock and reordering point help companies meet these challenges head-on and maintain
a consistent customer experience, while capturing sales and minimal wasted storage space.

The safety stock provides an inventory buffer so that it can be submerged when the above
circumstances occur, while the reorder point provides a time buffer so that it can be replenished

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in the merchandise. This means fewer reed commissions owed to suppliers, less operational
chaos, and more efficient use of storage space.

There are two ways to calculate the safety stock: one with standard deviation and one without.
First, the basic formula of safety stock is:

 Safety stock (maximum daily sales * maximum term in days) – (average daily sales *
average term in days)

The order point is calculated using the safety stock metric. Tells one when it is time to place a
new order to replenish inventory, along with the minimum order and display the quantities. This
metric takes delivery time into account, which helps avoid costly stocks.

Furthermore, the hospitality industry use just in time (JIT) management extensively, because
the Just-in-time (JIT) inventory strategy is an inventory management strategy that aims to have
as much finished product or intermediate goods as required by a company at the right time, thus
reducing inventory costs and wastes without negatively impacting customer supply. This is
the easiest aspects of JIT to apply in services are the use of multifunction workers, cycle time
reductions, setup time reductions, parallel processing, and workplace reorganization.

Now just-in-time an inventory management system in which material, or products are produced
and purchased only a few hours before they are put into use. The goal of Just-In-Time is to
increase inventory turnover and reduce the cost of tenure and any other costs associated with it.

For example, a faster stock change does not require as much storage space or storage to store
goods. Reducing waste and changing stock faster prevents perished products from getting
damaged or obsolete while in storage, reducing waste. Today, many companies adopted lean
thinking and JIT model, because the Just-in-time manufacturing is focused on efficiency,
while lean manufacturing is centered on using efficiency to add value for the customer.
Switching to JIT would reduce transportation and warehousing costs, making the product more
affordable. The JIT process adds value by increasing efficiency. In inventory management, the
Just-In-Time or JIT system reduces wastage, improves efficiency and productivity, and
contributes to smoother production flows. A shorter production cycle can decrease financial
costs, inventory costs and labor costs.

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Conclusions

Implementation of JIT practices could be implemented by restaurants, if the restaurant is willing

to undergo business process reengineering to ensure business processes are consistent with JIT
demands, and if the restaurant can access sufficient predictive information Regarding your
expected business levels for each day so that you can order the appropriate materials.

The company must participate in this activity to reap significant benefits, including reducing (if
not eliminating) food and inventory waste, reducing costs and increasing productivity, and
reducing the use of materials. of facilities and human resources.

The restaurant can also expect to have streamlined inventory processes and a reduction in costs associated
with the restaurant. Although there are some items (such as spices and condiments as well as durable
equipment) that cannot be integrated into a JIT supply chain for the restaurant, with proper coordination
with suppliers, all fresh food must be able to be included in this practice.

Redesigning business practices and careful consideration of what can and should be ordered in a
JIT manner. The JIT inventory system represents a shift away from the older "just-in-case"
strategy, in which producers carried much larger inventories of stock and raw goods, in case they
needed to produce more units because of higher demand.

Miami, June 13, 2020

References
 Carlson, Rosemary. Just-In-Time (JIT) Inventory Management. Increase Efficiency and Decrease Waste. June 20,
2019.
 Xin, He and Hayya, Jack. Total Quality Management. The impact of just-in-time production on food quality. August
2002.

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