B. Procurement, Production, Distribution, and Service (Part 1)

Question 1

The function of acquiring material for production.

Answer 1

Procurement

Question 2

A ______ center is a department assigned to both expense and revenue responsibilities. (ie. cafeteria)

Answer 2

Profit center

Question 3

A _____ center is a department that manages expenses, but does not generate revenue. (ie. HR dept, marketing dept)

Answer 3

Cost center

Question 4

_____-_____ is requesting samples from vendors for opening and comparison of qualities.

Answer 4

Can-Cutting

Question 5

This method of purchasing is when a buyer requests quotes on items from one or more sources by PHONE or IN PERSON.

Answer 5

Informal, open market

Question 6

**Informal, open market purchasing is used when a _______ amount is needed ______.

Answer 6

**Informal, open market purchasing is used when A SMALL AMOUNT IS NEEDED QUICKLY.

Question 7

Method of purchasing where *written specifications of items needed are submitted to vendors who then submit a price (bid on items). All bids are opened together and the order is placed with the lowest bid (price).

Answer 7

*Formal, competitive bid buying

Question 8

Method of purchasing where goods are purchased at a predetermined future date and price.

Answer 8

Future contracts

Question 9

A formal agreement with a single vendor for majority of purchases.

Savings achieved with high volume purchases.

Answer 9

Prime vending

Question 10

*________ purchasing is when the personnel in ONE OFFICE does all purchasing for ALL DEPARTMENTS.
(one organization)

Cost-effective and time saving.

Answer 10

*Centralized purchasing

Question 11

*__________ or _____ purchasing is when SEVERAL ORGANIZATIONS UNITE for JOINT PURCHASING.
(several organizations)

Economic advantage of large volume purchasing.

Answer 11

*Group or Co-Op purchasing

Question 12

Method of purchasing where **products are purchased as needed for immediate production and consumption, without need for storage or recording in inventory.

Receiving clerk takes items directly to prep/use. No storage.

Answer 12

*Just-in-time purchasing (JIT)

Question 13

A written record of items ordered and quantities needed.

Answer 13

Purchase order, requisition

Question 14

A _____ order eliminates the need to call in daily or weekly orders.

Answer 14

Standing order

Question 15

This type of order describes products delivered with all transport charges paid.

Answer 15

Free-on-board (FOB)

Question 16

_________ specifications indicate quality by objective test results.
ie. graded items like canned fruits and vegetables

Answer 16

Technical specifications

Question 17

*___-_____ (opening cans for comparison among brands) gives first-hand information on appearance, taste, and flavor.

Answer 17

Can-cutting*

Question 18

_______ ______ specifications indicate quality by brand.

Answer 18

Approved brand specifications

Question 19

_________ specifications indicate quality by functioning characteristic.

ie. pH of detergent, dishes washed/minute

Answer 19

Performance specifications

Question 20

List of approved products that an organization would like all personnel (who need such a product) to use.

Answer 20

Formularies

Question 21

*Avoid _______ with vendors-decline gifts and favors.

Answer 21

*Avoid collusion with vendors-decline gifts and favors.

Question 22

**A _____ ____ makes deal between (connects) buyers and sellers. Does not own products.

Answer 22

Food Broker**

Question 23

Steps to determining needs:

1. ____ x ____ = EP
2. Convert EP to lbs
3. __ / __

Answer 23

**Steps to determining needs:

1. (portion size) x (# of servings) = EP
2. Convert EP to lbs
3. (EP) / (% yield)

Question 24

If % yield not provided, but “shrinkage”, “waste” is stated, ____ ____ ______ _____ ______ to determine % yield.

Answer 24

If % yield not provided, but “shrinkage”, “waste” is stated, subtract this amount from 100% to determine % yield.

Question 25

1 gallon = __ quarts

Answer 25

1 gallon = 4 quarts

Question 26

Quantitative approach to ordering staple or regularly stocked items. Finds the quantity that minimizes both purchasing and inventory costs by determining the order size that is most economical. Total annual cost of restocking inventory depends on # of times it is ordered each year - decrease this cost by ordering larger quantities, less frequently.

Answer 26

Economic Order Quantity (EOQ) method

Question 27

Forecasting usage- This method is suitable for short-term forecasts. Assumes purchases follow a trend over time.

Answer 27

Time series method

Question 28

Example of a time series method of forecasting. Uniformly weighs past observations/usage (numbers from previous months are weighted equally).

Answer 28

Moving average

Question 29

Example of a time series method of forecasting. Does NOT uniformly weight past observations/usage - more recent values hold more weight.

Answer 29

Exponential smoothing

Question 30

*_______ _______ uses SOFTWARE to forecast usage.

Answer 30

Exponential smoothing*

Question 31

Model of forecasting that is based on the assumption that a relationship exists between the item being forecast and other factors, like selling price, # of customers. This is used in medium to long-term forecasting. Expensive to develop.

Answer 31

Causal model ie. Regression analysis

Question 32

Model of forecasting used when relevant data are scarce, or relationships between data do not persist over time. Must rely on opinions (expert opinions, marketing research)

Answer 32

Subjective model ie. Delphi technique

Question 33

The receiving area should be convenient to _______ and _______. Thermometers, can openers, scales, and hand carts should be available.

Answer 33

Close to delivery docks with easy access to storage.

Question 34

The invoice lists _____, ____ _____ and total cost. It is prepared by the vendor and accompanies the order.

Answer 34

The invoice lists items, unit price, and total cost.

Question 35

The invoice is checked against ______ and the _____ _____.**

Answer 35

The invoice is checked against items received and the purchase order.*

Question 36

The invoice method of receiving is to _____ ______ to see if all items were delivered, ______ items, ______ items on receiving report, and _____.

Answer 36

The invoice method of receiving is to check invoice to see if all items were delivered, inspect items, list items on receiving report, and store.

Question 37

* The _______ ____ receiving method is when the receiving clerk is provided with a blind invoice or purchase order that lists incoming merchandise, but omits quantities and weights. The receiving clerk inserts these numbers while checking the delivery. The blind invoice is then compared to the actual order. Forces the clerk to make a serious check of the delivery, but is also more time consuming and costly.

Answer 37

Blind check receiving method**

Question 38

The _____ ______ report lists items received, the date, # of units, unit price, supplier, and purchase order number.

Answer 38

The daily receiving report

Question 39

The ______ ______ is used when an order arrives without an invoice.

Answer 39

Substitution invoice

Question 40

The _______ for _____ lists discrepancies in an order, such as shortages.

Answer 40

Request for credit

Question 41

To prevent ____, the person who purchased the items should NOT also receive them. Schedule hours for receiving. Avoid busiest production times, and multiple deliveries at the same time.

Answer 41

Theft

Question 42

**Fresh fish should arrive at

Answer 42

**Frozen fish should arrive at

Question 43

*Storage needs are based on the ____.

Answer 43

*Storage needs are based on the menu.

Question 44

Storage area should be convenient to ________ and ________.

Answer 44

Receiving and production.

Question 45

Dry storage should be kept between _____ and ____ degrees F.**

Answer 45

Dry storage should be kept between 50-70 degrees F.**

Question 46

Cleaning supplies should be stored separately from dry storage. Items in dry storage should be __" off the floor and away from the walls to permit ______ and flow of air, removing moisture.

Answer 46

6" Ventilation

Question 47

**Dry storage should maintain a relative humidity of __-__%.

Answer 47

**Dry storage should maintain a relative humidity of 50-60%.

Question 48

**Perishable foods have a ___ water content, and require the highest humidity (__-__%).

Answer 48

**Perishable foods have a high water content, and require the highest humidity (85-90%).

Question 49

**All potentially hazardous foods should be stored

Answer 49

**All potentially hazardous foods should be stored

Question 50

Fresh fruits and vegetables should be stored at __-__ F. | Meat, dairy, and eggs should be stored at __-__ F.

Answer 50

Fresh fruits and vegetables should be stored at 40-45 F. | Meat, dairy, and eggs should be stored at 32-40 F.

Question 51

**Frozen foods are stored at __- negative __ F.

Answer 51

**Frozen foods are stored at 0-negative 10 degrees F.

Question 52

Storage time for refrigerated foods- Eggs in shell: __-__ weeks Eggs-yolks/whites: __-__ days Poultry, fish, ground meat: __-__ days Steak, chops, roasts: __-__ days

Answer 52

Storage time for refrigerated foods- Eggs in shell: 3-5 weeks Eggs-yolks/whites: 2-4 days Poultry, fish, ground meat: 1-2 days Steak, chops, roasts: 3-5 days

Question 53

This type of inventory is a running record of inventory balance. It is updated each time an item is added to or removed from storage.

Answer 53

Perpetual inventory

Question 54

This type of inventory is a physical count of items in storage. Usually done at the end of accounting period. Counted as asset on balance sheet.

Answer 54

Physical inventory

Question 55

*This type of inventory uses a formula to determine when the item must be reordered (the order point).

Answer 55

Fixed order quantity inventory system*

Question 56

*Using the fixed order quantity inventory system, the order point is determined by: (_______ ______ _______) x (________ _______) + safety stock

Answer 56

(average daily use) x (lead time) + safety stock = OP Lead time: # of days between order and delivery Safety stock = back-up storage

Question 57

This method of inventory management sets a par level for EACH item. Stock is brought up to par level each time an order is placed, regardless of the amount on hand. ie. If par is 10, and inventory has 8, order 2.

Answer 57

Par stock method

Question 58

This method of inventory management is a stock rotation. Merchandise is arranged so that older containers are in front and are used first.

Answer 58

FIFO

Question 59

Method of inventory management where stock is allowed to deplete to a minimum level before a new order is placed. Goods are ordered only when minimum is reached, and only in amount needed to reach maximum level. **Amount of item ordered is the SAME each time it is ordered.**

Answer 59

Mini-max stock **Amount of item ordered is the SAME each time it is ordered.**

Question 60

The _ _ _ inventory __________ system is characterized by the idea that small amounts of product account for a major portion of inventory value. **Relative importance is measured by the total value of purchases for the item each year (the activity level).** A items: high value (15-20% of inventory, 75-80% of costs) B items: moderate value C items: low value (60-65% of inventory, 5-10% of costs)

Answer 60

ABC Inventory Classification System **Relative importance is measured by the total value of purchases for the item each year (the activity level).**

Question 61

*With the ABC Inventory Classification System, the tightest possible controls are needed to __ items, which are the most expensive, and usually protein foods. Keep a minimal amount and watch carefully.

Answer 61

*Tightest control needed for A items

Question 62

Method of determining the value of inventory that is based on actual purchase price of the product. Counts products and adds values together.

Answer 62

Purchase price method

Question 63

Method of determining the value of inventory that is based on the AVERAGE price paid for products.

Answer 63

Weighted average purchase price method

Question 64

Method of determining the value of inventory that is based on the last price paid for each item. **Uses the most RECENT prices so tends to price inventory HIGH.

Answer 64

FIFO **Uses the most RECENT prices so tends to price inventory HIGH.

Question 65

Method of determining the value of inventory that is based on the OLDEST price paid for each item. Usually underestimates value - night use this method if must pay tax on inventory.

Answer 65

LIFO

Question 66

*The use of a _____ _____ _____ is a quality control measure.* All ingredients being used that day are measured and brought to the kitchen by one person. Eliminates the need to go in and out of storeroom throughout day. Saves food costs and helps with standardization of recipes.

Answer 66

Central ingredient room* is a quality control measure.