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Food Systems 1 Exam #3 > Chapter 5: Procurement > Flashcards

Chapter 5: Procurement Flashcards

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1
Q

Purchasing

A

Activity concerned with the acquisition of products.

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2
Q

Profit Center

A

Department that generates revenues greater than its expenses and creates profit for the organization.

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3
Q

Cost Center

A

Department that has expenses but does not generate profits to cover those expenses.

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4
Q

Producer

A

Someone who produces raw food to sell.

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5
Q

Processor

A

Organization that takes raw food items and transforms them into packaged products for sale to consumers or food service operations.

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6
Q

Distributor

A

Wholesaler responsible for transferring products from the processor or manufacturer to the supplier.

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7
Q

Wholesaler

A

Distributor that purchases from various manufacturers or processors, provides storage, sells, and delivers products to suppliers.

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8
Q

Broker

A

Independent sales and marketing representative who contracts with manufacturers, processors, or prime-source producers to sell and conduct local marketing programs with wholesalers, suppliers, or foodservice operations.

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9
Q

Manufacturer’s Representative

A

Distributor who represents a manufacturing company and informs suppliers of products by this manufacturer.

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10
Q

Supplier

A

Organization that offers products for sale.

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11
Q

Standards of Identity

A

Federal standards that identify what a given food product contains.

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12
Q

Standards of Quality

A

Federal standards for product quality attributes such as tenderness, color, and freedom from defects.

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13
Q

Irradiation

A

Exposure of foods to gamma rays or radiant energy to reduce harmful bacteria.

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14
Q

Value Analysis

A

Methodical investigation of all components of an existing product or service with the goal of discovering and eliminating unnecessary costs without interfering with the effectiveness of the product or service.

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15
Q

Specification

A

Statement understood by buyers and suppliers of the required quality of products, including allowable limits of tolerance.

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16
Q

Technical Specification

A

Specification that indicates quality by objective and impartial test results.

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17
Q

Approved Brand Specification

A

Specification that indicates quality by specifying a brand name or label.

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18
Q

Performance Specification

A

Specification that indicates quality by functioning characteristics of the product.

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19
Q

Bid Buying

A

Buyer decides which supplier will be chosen for the order based on bids submitted from the seller.

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20
Q

Bid

A

A price quotation from seller.

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21
Q

Law of Agency

A

Buyer’s authority to act for the organization, the obligation each owes the other, and the extent to which each may be held liable for the other’s actions.

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22
Q

Law of Warranty

A

Guarantee by the supplier that an item will perform in a specified way.

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23
Q

Law of Contract

A

Signed agreement between two or more parties related to the purchase of a product or service.

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24
Q

Invoice

A

Document prepared by the supplier that includes product names, quantity, and price.

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25
Q

Requisition

A

Form used by foodservice manager to request items from purchasing manager or department.

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26
Q

Purchase Order

A

Document completed by the buyer and given to the supplier listing items to be purchased.

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27
Q

F.O.B.

A

Free on board.

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28
Q

F.O.B. Origin

A

Buyer selects freight company, pays freight charges, and owns product during transit.

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29
Q

F.O.B Destination

A

Buyer pays freight charges, but seller owns product during transit.

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30
Q

Receiving

A

Activity for ensuring that products delivered by suppliers are those that were ordered.

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31
Q

Storage

A

Holding of products under proper conditions to ensure quality until time of use.

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32
Q

Physical Activity

A

Periodic actual counting and recording of products in stock in all storage areas.

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33
Q

Perpetual Inventory

A

Purchases and issues continuously are recorded for each product in storage, marking the balance in stock available at all times.

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34
Q

FIFO

A

First in, first out.

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35
Q

LIFO

A

Last in, first out.

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36
Q

Ethics

A

Principles of conduct governing an individual or business.

37
Q

Code of Ethics

A

Set of rules for standards of professional practice or behavior established by a group.

38
Q

Supply Management

A

The identification, acquisition, access, positioning, and management of resources for an organization.

39
Q

Procurement

A

A systematic exchange between a seller and buyer to obtain goods and services, which includes determining types of products needed, making purchases, receiving and storing shipments, and administering purchase contracts.

40
Q

The 10 Skills of Purchasing Managers

A
  1. Interpersonal communication
  2. Customer focus
  3. Ability to make decisions
  4. Negotiation
  5. Analytical ability
  6. Managing change
  7. Conflict resolution
  8. Problem solving
  9. Influence and persuasion
  10. Computer literacy
41
Q

Buyer

A

The one who listens to the desires of customers, who determines what is grown and packaged, and who understands how items are processed or manufactured, shipped, sold, and consumed. A person who purchases goods or services.

42
Q

Full Wholesalers

A

Generally carry large amounts of stock, permitting the buyer to purchase everything from frozen and canned products to kitchen equipment and furniture.

43
Q

Special Breed Distributors

A

Purchasing and product movement specialists whose customers are restaurant chains that purchase food directly from processors and hire a distributor to deliver the products.

44
Q

Wholesale Club

A

Carry food products in household sizes and large sizes and are often used by small food service operations.

45
Q

FDA

A

Ensures that foods other than meat, poultry, and fish are pure and wholesome, safe to eat, and produced under sanitary conditions; the act also requires that packaging and labeling are in agreement with the contents. Provides three mandatory standards for products being shipped across state lines: identity, quality, and fill of container.

46
Q

U.S. Department of Agriculture

A

Facilitates strategic marketing of agricultural products in domestic and international markets by grading, inspecting, and certifying the quality of these products in accordance with official USDA standards or contact specification.

47
Q

U.S. Department of Commerce

A

The FDA has set seafood inspection requirements for processors and importers. The regulations require that HACCP plans be followed.

48
Q

Imported Food Regulations

A

Meat and poultry imported into the United States must be produced under standards equivalent to those of the United States for safety, wholesomeness, and labeling accuracy. The FDA has jurisdiction over all foods not covered by federal meat and poultry inspection laws.

49
Q

Standards of Fill

A

Of a container tell the packer how full a container must be to avoid the charge of deception.

50
Q

USDA Quality Grades for Beef

A 
These grades pertain to the palatability qualities of beef, namely tenderness, juiciness, and flavor. The grading is voluntary and the grades are:
U.S. Prime
U.S. Choice
U.S. Select
U.S. Standard
U.S. Commercial
U.S. Utility
U.S. Cutter
U.S. Canner
51
Q

Yield Grades for Beef

A

Provide a nationwide uniform method of identifying “cutability” differences among beef carcasses.

52
Q

Kosher

A

Meaning “proper” or “acceptable”

53
Q

Halal

A

“Permissible”

54
Q

Haram

A

“Unlawful” or “prohibited”

55
Q

Informal Purchasing

A

In which quotations are given and orders made by telephone or personally with a salesperson, is often used when time is an important factor.

56
Q

Formal Purchasing

A

Use of competitive bidding which usually culminates in a formal contract between the buyer and supplier.

57
Q

Line-Item Bidding

A

Each supplier bids on each product on the buyer’s list, and the one offering the lowest price receives the order for that product. This is much more time consuming than the all-or-nothing bid and costs more for both the buyer and supplier.

58
Q

All-or-Nothing Bidding

A

Requires suppliers to bid the best price on a complete list of items.

59
Q

Agent

A

An individual who has been authorized to act on behalf of another party, known as the principal.

60
Q

Principal

A

Person who needs an agent to work on his or her behalf.

61
Q

Agency

A

The business relationship between the agent and the principal.

62
Q

Express Warranty

A

Promises, specifications, samples, and descriptions of goods that are under negotiation.

63
Q

Implied Warranty of Merchantability

A

Suppliers “puff” the virtues of their products for the purpose of making a sale.

64
Q

Implied Warranty of Fitness for a Particular Purpose

A

Buyer relies on the supplier’s skill or judgment to select or furnish suitable goods.

65
Q

Competency

A

Means that the agreement was reached by person having full capacity and authority to enter into a contract.

66
Q

Legality

A

Means that a valid contract cannot conflict with any existing federal, state, or local regulations or laws.

67
Q

Independent Purchasing

A

Done by a unit or department of an organization that has been authorized to purchase. In small hospitals, the head of the Food and Nutrition Department may have authority to do the purchasing and thus becomes the agent for the principal, which is the hospital.

68
Q

Centralized Purchasing

A

Purchasing activity is done by one person or department.

69
Q

Group Purchasing

A

Bringing together managers from different operations for joint purchasing.

70
Q

Warehouse Club Purchasing

A

No-frills approach to purchasing because the wholesale warehouse is a self-service, cash-and-carry operation.

71
Q

Just-in-Time Purchasing

A

Purchasing of products for immediate production and consumption by the customer without having to record it in inventory records.

72
Q

The Goals of JIT Purchasing

A
  1. Secure a steady flow of raw materials
  2. Reduce the lead time required for ordering a product
  3. Reduce the amount of inventory in the storage and production areas
  4. Reduce the cost of purchased materials
73
Q

Requisition Number

A

This number is necessary for identification and control purposes and is generally accompanied by a code for the originating department.

74
Q

Delivery Date

A

This date, on which the product should be in the storeroom for use by the cooks, should always allow sufficient time to secure competitive bids and completion of the full purchase transaction, if possible.

75
Q

Budget Account Number

A

This number indicates the account to which the purchase cost will be charged.

76
Q

Quantity Needed

A

Quantities should be expressed in a common shipping unit, such as cases, along with the number of items in a unit. For example, the entry on the requisition is for 20 cases of diced tomatoes, with six No. 10 cans to a case.

77
Q

Description of the Item

A

The information may include the product specification, brand, or catalog number.

78
Q

Invoice Receiving

A

The receiving clerk checks the quantity of each product against the purchase order. Any discrepancies are noted on both the purchase order and the invoice. This method is quick but can be unreliable if the receiving clerk does not compare the two records and only looks at the delivery invoice.

79
Q

Blind Receiving

A

The receiving clerk uses an invoice or purchase order with the quantity column blanked out and records on it the quantity of each product received. This method requires that each product be checked because the amount ordered is unknown; it is time consuming for both the receiving clerk and the deliverer and, therefore, expensive in labor costs.

80
Q

Electronic Receiving

A

Tabulator scales, which weigh and automatically print the weight on paper, are being used in large operations, as is the UPC with the use of handheld scanners.

81
Q

ABC Method

A

Tool for classifying products as A, B, or C according to their value.

82
Q

Mini-Max Method

A

Tool for controlling inventory by establishing lower and upper levels for each product in storage.

83
Q

Economic Order Quantity (EOQ)

A

Inventory concept derived from a sensible balance of ordering cost and holding cost.

84
Q

Inventory Valuation Methods

A

Inventories are subject to change due to usage and product replacement are continual. The inventory has value and represents a significant portion of current assets owned and should be taken monthly and the dollar value is recorded. Different methods used are: actual purchase price, weighted average, FIFO, and LIFO.

85
Q

Actual Purchase Price

A

Inventory valuation method involving pricing the inventory at the exact price of each product.

86
Q

Weighted Average

A

Inventory valuation method in which a weighted unit cost is used and is based on both the unit purchase price and the number of units in each purchase.

87
Q

LIFO

A

Inventory valuation method based on the assumption that current purchases are largely made for the purpose of meeting current demands of production.

88
Q

FIFO

A

Inventory valuation method based on the assumption that pricing closely follows the physical flow of products through the operation.

Food Systems 1 Exam #3 (2 decks)

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