Week 2: Purchasing Failures

Question 1

Common failures

Answer 1

1. Failing to request quotes ahead of purchase
2. Poor organization and planning
3. Failing to establish a daily budget by estimating sales (noting the weather) and keeping a log
4. Misunderstanding vendor deadlines and minimums (ordering accordingly)
5. Not using common measurable units when comparing prices
6. Failing to consider all costs of items (including freight and delivery fees)
7. Failing to receive properly (checking items upon arrival)
8. Not signing for only what was received
9. Forgetting to check prices against bids
10. Failing to maintain cold chain and rotating items

Question 2

Unit for order cycle

Answer 2

Days

Question 3

Format of sales log

Answer 3

• Separate by food and beverage
• Include changes in those numbers
• Include outside factors affecting business demand on calendar

Question 4

How to set par level

Answer 4

1. Identify order cycle
2. Determine max and min quantities during cycle period

Question 5

Lesser-known item costs

Answer 5

Freight, handling, delivery, fuel, rental, restocking fees, set in place, curb delivery, and tax

Question 6

Perishable products (definition)

Answer 6

items that degrade quickly when exposed to extreme heat or cold

Question 7

When to use FIFO

Answer 7

With perishable goods and inflationary environments

Question 8

When to use LIFO

Answer 8

Non-perishable goods, seasonal stable goods, and reducing taxable income

Question 9

2 critical aspects of demand forecasting

Answer 9

Sales velocity and lead time