Receiving, Storage, and Issuing Control

1. Receiving, Storage, and Issuing Control • chapter 9

2. Opening Questions • Describe a foodservice receiving area that you have seen. • What goes on there (specifically)? • What equipment is present and used there?

3. Required Resources for Receiving • Well-trained Employee • Space to receive • Scales • Thermometer • Knife • Ruler • Hand Truck • Dollies • Cleaning Supplies • Pens, Paper • Clipboards • Calculators • Desk • Computer • File Cabinets

4. Needed from Purchaser • Order Sheets • Bid Sheets • Product Specifications • Daily List of Deliveries

5. Checking Products and Invoices

6. Invoice Adjustments and Approvals

7. Approving the Invoice

8. Receiving Clerk’s Daily Report • List of all items received on a given day • Includes quantities and prices • Sorts items as • Directs (go to kitchen) • Stores (go to storeroom) • Sundries (non-food or –drink) • Easier to track daily food and beverage costs • Send with invoices and credit memos to accounting

9. Food Storage • Done quickly after receiving to prevent spoilage and theft • Store frozen and refrigerated products first

10. Coolers

11. Dry Storage

12. Chemical and Cleaning Supplies

13. Storage Guidelines • Rotate stock using FIFO to reduce the risk of product spoilage in storage; place new products behind old ones. • Keep identical products in the same location. • Organize inventory sheets to align with product location on shelves. • Spoilage Report – lists products that spoiled in storage.

14. Requisitions and Issuing

15. Closed vs. Open Storerooms Closed Storerooms Pro: More control Con: More costly, requiring high labor costs for a storeroom manager or clerk. Open Storerooms Pro: Less costly Con: Less secure vs.

16. Storeroom Controls Open Storeroom controls: • Keep storeroom open only briefly and watch employees closely during that time. • Only managers access storeroom when not actively open. • Keep expensive products locked up; only manager can access them. General Controls: • Conduct regular inventories to catch high food cost problems early. • Install security cameras.

17. Requisition and Issuing Process

18. Transfers • Transfer form looks like requisition form but lists departments issuing and receiving • Sent to cost control manager with requisitions A transfer is issuing or receiving food from another department or business unit.

19. Conducting Inventory • 1 person counts and 1 person records • Use blank sheets or printed inventory lists • Can use handheld scanners • Completed sheet includes name, quantity, unit, and extended price for each item • Do when restaurant is closed and no deliveries are scheduled

20. Valuing Inventory NOTE: Price per unitis not always obvious, since prices may change with each order.

21. Valuing Inventory

22. FIFO (First In, First Out) Method Assumes cost is based on most recent invoice and only progresses back in time if there is more inventory than can be accounted for with the latest invoice.

23. Example 9a • A restaurant has 140# of flour in inventory on Aug. 20th. • It purchased: • 50# on Aug. 3rd for $23/50# • 50# on Aug 10th for $24/50# • 100# on Aug. 17th at $23.50/50#. Using the FIFO Method, What is the value of the flour in inventory?

24. Example 9a (cont.) 100# @ $23.50/50# = 100 X 23.50 ÷ 50 = $47 40# @ $24/50# = 40 X 24 ÷ 50 = $19.20 Total for 140# = $47 + $19.20 = $66.20

25. LIFO (Last In, First Out) Method Cost based on the first invoice for the period and only progresses forward once the entire inventory for that invoice has been accounted for.

26. Example 9b From data in example 9a, calculate the value of 140# of flour using the LIFO method. 50# @ $23/50# = 50 X 23 ÷ 50 = $23 50# @ $24/50# = 50 X 24 ÷ 50 = $24 40# @ $23.50/50# = 40 X 23.50 ÷ 50 = $18.80 Total for 140# = $23 + $24 + $18.80 = $65.80

27. Weighted Average Method total amount spent on an ingredient over the inventory period Price per unit = total number of units of that ingredient purchased during the same period

28. Example 9c From data in Example 9a, calculate value of 140# of flour using Weighted Average. 50# X $23/50# = $23 50# X $24/50# = $24 100# X $23.50/50# = $47 Total Flour expense = $23 + $24 + $47 = $94 Total weight = 50# + 50# + 100# = 200# Price per unit = $94 ÷ 200# = $0.47/# Value of 140# = 140# X $0.47/# = $65.80

29. Actual Cost Method • Inventory sheet must have multiple lines per product as identical products with different unit costs must be counted separately • If inventory is properly rotated, this method is the same as the FIFO method The Actual Cost Method uses the price written on each unit at the time of storage.

30. Most Recent Price Method • Uses the most recent invoice price as the price per unit for all units of that item in inventory. • Referring to example 9a, all 140# of flour would be valued at $23.50/50# for this method.

31. Total Inventory Value Total inventory value = sum of all inventory item extensions The inventory value is both the closing inventory value for the prior period and the opening inventory value for the upcoming period.

32. Preventing Inventory Theft

33. Inventory Turnover Rate Formula Opening Inv + Closing Inv Average Inventory = 2 Cost of Food Sold Inventory Turnover = Average Inventory

34. Inventory Turnover Rate • Ideal rate is for inventory to turnover every 1-2 weeks. • To convert monthly inventory turnover rate to days to turnover the inventory… # of days in the month Days to turnover inventory = Inventory turnover

35. Example 9d For January, cost of food sold in restaurant is $37,500. Opening inventory for January is $12,300 and closing inventory is $12,900. How often (in number of days) does this restaurant’s inventory turnover?

36. Example 9d (cont.) • Average Inv. = (Opening + Closing) ÷ 2 • = ($12,300 + $12,900) ÷ 2 • = $12,600 • Inv. Turnover = Cost of Food Sold ÷ Avg. Inv. • = $37,500 ÷ $12,600 • = 2.98 • Days to Turnover = Days in Mo. ÷ Inv. Turnover • = 31 ÷ 2.98 • = 10.4 days

37. Benefits of Quick Turnover

38. Special Concerns for Beverages: Receiving • Alcohol picked up at ABC store checked by person picking it up and checked again by someone else at the business • Never leave delivered alcohol unattended until it is secured in storage • Schedule alcohol deliveries when no other deliveries are scheduled • Check labels and fill levels carefully

39. Special Concerns for Beverages: Storage • Lock up alcohol and limit the number of managers with key access. • Store each type of bottle in its own bin. • Use bin numbers and order bins numerically for easy location.

40. Special Concerns for Beverages: Storage

41. Special Concerns for Beverages: Issuing • Use a bottle exchange program. • Use written requisitions (even if storeroom is otherwise open). • Ideally, only one manager has the key and the right to issue alcohol. • Managers must check paperwork against inventories and verify control procedures are being implemented properly.