Chapter 5: Foodservice Functions Flashcards
(102 cards)
Involves oral negotiation and are usually
used when the amount is not large and speed and simplicity are desired.
Informal Buying
The quantity and quality of an item are listed and a space or column is provided for recording quoted prices of vendors.
The prices are compared and a decision is made.
Quotation and Order Sheet Method
Used when there is an extreme need for a particular food item.
The buyer orders without knowing the price, then the vendor locates the food item.
When the item is located, the vendor informs the buyer of the price and if it is within the buyer’s range then, the item is delivered.
Blank Check Buying
Used when markets are unstable or prices are not known.
The vendor buys the food item at the most favorable price and adds a certain amount to the quoted price.
The additional price is expressed in percentage (20%) and is used to cover the seller’s profit.
Cost-plus Buying
Usually involves large contracts for commodities to be purchased for long periods of time and is usually written than oral.
Formal Buying Methods
Possible suppliers are given written specifications (quantity and quality-wise) and are asked to submit bids (cost per item per quantity)
request for quote (RFQ)
The buyer send invitations for possible sellers to bid to supply food items.
The invitation contains a set of conditions: terms of payments, discount, method of delivery, billing requirement, payment arrangement, specifications of the food item (quality and quantity).
Sellers or bidders provide the buyer the price quotation.
Sealed bids are opened at a specific time. Only sellers who meet the established purchase conditions are awarded the bidding.
Competitive Bid
The buyer and seller negotiate over the phone about the terms of purchase, specifications and others.
Different seller are contacted who can supply the commodity and put the quotation in writing.
The different quotations are studied and a decision is made.
Arrangement is made over the phone and put into writing.
Negotiated Bid
Used by businesses with enough capital and staff.
Food items are contracted for future delivery.
The buyer is assured of continuous supply at an established price.
This method avoids shortages and price fluctuations
Futures and Contracts Methods
Purchasing goods in bulk from a membership-based retail store that operates on a large scale, typically offering significant discounts on products. These stores, also known as warehouse clubs or wholesale clubs, often sell a wide range of items, including groceries, electronics, household supplies, and more, at lower prices compared to traditional retailers.
Warehouse club buying
A buyer places a recurring order for goods or services, typically at regular intervals, without needing to repeat the process each time. It is often used in situations where there is a consistent demand for the same products, like office supplies, medical supplies, or subscriptions to services.
Standing order
A buyer acquires goods or services from the open market without relying on formal contracts, long-term agreements, or a structured purchasing process. It is typically characterized by flexibility and speed, allowing the buyer to source items as needed from any available supplier, often based on price, availability, or convenience at that moment.
Open-market buying
A buyer forms a partnership with a single, primary supplier to meet the majority of their purchasing needs. This vendor becomes the main source for a broad range of goods or services, streamlining the procurement process by reducing the need to engage multiple suppliers.
Prime Vendor or One-Step Method
setup storage spaces and check all deliveries for quality and quantity/weight
receiving and storage
supplying goods to the preparation units after they have been received or stores
issuing
purchasing methods
uses specifications and quotations within a stated time for the items listed; used in bigger operations
formal buying method
purchasing methods
orders supplies from a selected list of dealers on a daily, weekly, or monthly basis
the set prices are based on specifications
used in small operations
informal buying method
necessary to avoid panic buying, pilferage, spoilage, buying according to price w/o consideration of quality, pressure buying and over or short purchasing
purchase control
ordering system
quantity if a item required to meet anticipating needs in some specific upcoming period
par stock sytem
an item is allowed to deplete to safety level before new order is submitted to bring up level to maximum
minimax system
ordering system
level in which the stock on hand is depleted before additional orders are placed
reorder point
ordering system
amount to order each time the quantity of an item diminishes to the reorder point
reorder quantity
formula used to determine the optimum order size
economic order size
sets a predetermined level of inventory that must always be on hand for each item. When stock falls below this level, it triggers a reorder
par stock
