PURCHASING

CONTROL
AHMAD SAYUTI BIN YAHYA
MANAGEMENT & SCIENCE UNIVERSITY
LEARNING OBJECTIVES:
• Describe the application of the four step control process to the purchasing
function in a foodservice establishment.
• Distinguish between perishable and non perishable food
• Explain the six reason why standard purchase specifications are important and
provide examples of specifications for both a perishable and a non-perishable food
item.
• Describe the process used to determine the quantity of perishable food to
purchased.
• Compare and contrast the periodic order method and perpetual inventory
methods for purchasing non-perishable item.
LEARNING OBJECTIVES:
• Determine order quantities using the periodic order method
• Determine order quantities using the perpetual inventory method
• List the normal sources of supply for restaurant food purchases.
• List and explain the advantages and disadvantages of centralized purchases.
 1.0 Introduction – Purchasing Control
Primary purpose of establishing purchasing control :
To ensure a continuing supply of sufficient quantities
of foods- at the right place, right time, right price and
right quality.

Four principal of effective purchasing control:

1. Responsibility for purchasing is fixed
2. Standards of quality are established
3. Needed quantities are established
4. Purchases of food are at the most favourable
price.
PURCHASING PRINCIPLES

Right Right
Place Time

Right Right
PURCHASE
Quantity Supplier

Purchasing
Right Principles
Right Price
Quality
PURCHASING CONTROL PROCESS
Bids are compare to ensure that ingredients are bought at the lowest price for the best quality.
Quote Comparison

All purchases must be ordered in writing or by phone. Order must show: Item, brand, unit price,
Ordering quality, quantity, Total amount, delivery time, kind of transport, and condition.

Receiving During receiving delivered good are checked against the order. Correction are made if necessary

Delivery of goods is entered in stick records or on bin cards; Direct goods are delivered to kitchen as
Storage needed.

Issue and production Opening stock in kitchen + issues from stores + direct deliveries = Total kitchen stock.

Control of invoices Issues are reviewed by F&B manager or department.

Opening stock + deliveries – closing stock = Total food used (Food Cost)
Total food cost
The food cost % is calculated by the controller and reported.
Food Cost %
Types of food purchases
• Perishable Food Items
• Fresh food that have short useful life after they have been
received.
• E.g. Seafood, Cheese, Vegetables, Fruits
• Should be purchased for immediate use in order to take
advantage of the quality required at the time of purchase.
• Non- Perishable Food Items
• Item that have longer “shelf life”
• Also refers as “groceries” or “staples”.
• Often on shelf and at room temperature for weeks or
months
• E.g. Salt, Sugar, Canned food, spices, flavourings
ESTABLISHING QUALITY STANDARDS
• If a restaurant to produce products of consistent quality, it
must use raw materials of consistent quality.
• Thus, it is important for the management to develop a list of
items to be purchased and list of appropriate details those
specific and distinctive characteristic that will best describe the
desired quality of each item.
• The list of item is also known as “Standard Purchasing
Specification”.
• Specification normally will be based on grading standards
established by the federal government.
• Once the specifications has been written, they are duplicated
and distributed to potential purveyors to ensure that each will
understand the exact requirement of the restaurant.
Usage of Specifications
• Force the management team to determine exact requirements in advance for any
commodity.
• Useful in menu preparation- it is possible to use one cut of meat, purchased
according to specifications to prepare several different items on that menu.
• Eliminate understandings between the steward and purveyors if they are circulated.
• Circulation of specifications for one commodity to several purveyors makes
competitive bidding possible.
• Eliminate the need for detailed verbal descriptions each time a commodity is
ordered
• They facilitate checking food as it is received.
Specification Examples
ESTABLISHING QUANTITY STANDARDS
• All food deteriorate in time, thus it is important to get the
supply in the right quantity to eliminate shortage as well as
overstock.
• Remember, shortage will cause decrease reputation while
overstock will cause waste and increase food cost.
• Perishables – Purchase routine must be based on forecast
sales and to take into consideration of amounts already in
hand before ordering another supply. “Steward’s Market
Quotation List” normally used to order perishables.
• Non-perishables – Not a major problem as it can kept longer,
but cash tied up to non-perishable is not available to meet
other operating expenses. Thus, when buying non
perishables should be avoid excessive quantities on hand.
Periodic Order Method
• The most common method for maintaining stores’
inventories at appropriate levels.
• With methods for ordering perishables permits
comparatively infrequent ordering, this method focus less on
non-perishable and attend more on perishable which require
considerable time.
• The calculation:
• Amount required for the upcoming period
- Amount presently on hand
+ Amount wanted on hand at the end of the period to last until
the next delivery.
= Amount to order
Periodic Order Method
• The most common method for maintaining stores’
inventories at appropriate levels.
• With methods for ordering perishables permits
comparatively infrequent ordering, this method focus less on
non-perishable and attend more on perishable which require
considerable time.
• The calculation:
• Amount required for the upcoming period
- Amount presently on hand
+ Amount wanted on hand at the end of the period to last until
the next delivery.
= Amount to order
Examples:
• In certain restaurant ordering once a month, one of the items
ordered might cans of sliced pineapple, packed twelve cans to
a case. The item is used at the rate of ten cans per weeks and
delivery normally takes five days from the date an order is
placed. If the steward in this establishment found fifteen cans
of the shelf, anticipated normal use of forty cans during the
upcoming period or approximately four weeks, and wanted
fifteen cans on hand at the end of the upcoming month:
• Answer:
50 cans required 15 now in hand
+ 15 to be left at the end of the month
= 50 to be ordered on this date
Perpetual Inventory Method
• Not widely used although have a better control purposes.
• May require extra personnel as this method will need
someone to frequently check the inventory, thus inhibit a
more accurate numbers of inventory record.
• Primary purpose: To ensure the quantities purchased are
sufficient to meet anticipated need without being excessive
and to provide effective control over items that are being
stored for future use.
• Par stock = benchmark of maximum quantity of the item to
be ordered
Perpetual Inventory Method
• Maximum quantity can be determined only after careful
weighing of following consideration:
• 1. Storage space
• 2. Limit of inventory valuation prescribe by management
• 3. Desired frequency of ordering
• 4. Usage
• 5. Purveyors minimum order requirement
Perpetual Inventory Method
• Reorder Calculation:

Par Stock
- Re0rder point
Subtotal
+ Normal Usage until delivery
Reorder Quantity
Sources of supply
• The availability of sources will vary according to the location
of business.
• Major cities tend to offer a greater number of supplier as the
selection of supplier are nearer.
• Isolated areas offer lower number of supplier and probably
will depend on local farmer markets.
• Categories of supplier can be classified as below:
• Wholesaler
• Local Producers
• Packers
• Local farmers
• Retailers
• Cooperative Association
Centralized Purchasing

• Under the Centralized Purchasing System, the

requirements of individual units are delayed to
central office, which determines total
requirements of all units and the purchases that
total, either for delivery to the individual units or
by the dealer, or for centralized delivery.
Advantage of centralized purchasing
• Foods and beverages are purchased at a lower price
because of volume purchasing
• I provides a better opportunity to obtained desired
quality because purchaser has a greater choice of
markets.
• Goods can be purchased to the purchaser’s exact
specifications
• Larger inventories can be maintained assuring a more
constant supply to individual units.
• Greater control over dishonesty of individual unit food
purchasers can maintained.
Disadvantage of centralized purchasing
• Unit must accept the standard item in stock and
has little freedom to purchase for its own peculiar
needs.
• Units cannot take advantage of local “special” at
reduced prices.
• Menus usually must be more standardize, thus
limiting the individual unit manager’s freedom to
change a menu.
Standing Orders
• Steward make arrangement with certain purveyors
for the delivery of goods without any specific
orders.
• Take in two forms:
• 1. Calls for delivery of specific number of items (e.g.
bread)
• 2. Calls for arrangement for replenishing of stock each
day, up to a certain predetermined number.
Question and Practices
1. List ten each of food item you would consider perishable and non perishable.

2. Write a standard purchase specification for each of the following:

Fish
Potato
Chicken
Question and Practices
3. Assume a certain restaurant uses the periodic order method. Determine the
amounts to order for canned peaches if orders are placed every two weeks and
a. Normal usage is one case of twenty-two cans per week
b. Five cans are presently on hand
c. The amount desired as an ending inventory is fourteen cans
Question and Practices
4. Assume a restaurant uses the perpetual order method. Determine the reorder
point, and at that point, the amount of canned pears to order given the
following:
a. Normal usage is twenty-two cans per week
b. It takes four days to get delivery of the item
c. Par stock is set at forty-two cans
d. Cans come packed twelve to a case.
THANK YOU!