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Chapter 4 Purchase Orders How Much Stuff Should I Buy?

Chapter 4 Purchase Orders How Much Stuff Should I Buy?. Chapter Outline. Yield Tests Sales Forecasting Order Size Adjustments to Order Sizes. Learning Objectives. Discuss the consequences of over-and underordering. Calculate acceptable order sizes, EP weight, and edible product yield.

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Chapter 4 Purchase Orders How Much Stuff Should I Buy?

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  1. Chapter 4Purchase OrdersHow Much Stuff Should I Buy?

  2. Chapter Outline • Yield Tests • Sales Forecasting • Order Size • Adjustments to Order Sizes

  3. Learning Objectives • Discuss the consequences of over-and underordering. • Calculate acceptable order sizes, EP weight, and edible product yield. • Examine and diagnose causes of product loss. • Prepare sales forecasts needed to enhance the accuracy of purchasing decisions.

  4. Introduction Buyers must balance carrying or storage costs (inventory on the shelves) and stockout costs (irritated, disappointed customers). • Options: • Software applications • Conduct yield tests • Forecast sales • Determine order size

  5. Yield Tests • Step One: Buy enough of the product to conduct two or more tests (or get free samples)

  6. Yield Tests • Step Two: Calculate the item’s as-purchased (AP) weight • Meats, fish and poultry may weigh less then when purchased due to moisture loss • shrink allowance may be addressed on the specification sheet)

  7. Yield Tests • Third Step: use the exact service production procedures used in the restaurant • Calculate weight of waste • Subtract from AP weight • Result will be the edible-portion (EP) weight (also called usable weight or servable weight) • Perform test more than once and average results

  8. Yield Tests • Five Causes of Product Waste • Mise en place – unavoidable cutting/trimming loss • Production loss – shrinkage due to cooking; also trimming of fat after cooking, discarding of end cuts, etc. • Pilferage – eating and drinking on the job (cont.)

  9. Yield Tests • Five Causes of Product Waste (cont.) • Unanticipated mistakes • Style of service – all-you-can-eat items, food bars, free refills on drinks, etc., are hard to average • Analyze a product’s use over two weeks, divide by number of customers for average portion size

  10. Yield Tests • Best Option: conduct yield tests in your own kitchen • Second Best Option: Use the edible yield percentages in The Book of Yields or the Chef’s Book of Formulas, Yields and Sizes • Third Best Option: take the word of your purveyor

  11. Yield Tests A salmon weights 16 lbs (AP) and yields 12 lbs (EP) What is the yield percentage?

  12. Yield Tests Answer: EP ÷ AP × 100 = Yield Percentage 12 ÷ 16 = .75 × 100 = 75%

  13. Yield Tests • If the AP price for an item is $2.07 per pound and the EP cost is $3.51 per servable pound, what is the yield percentage?

  14. Yield Tests First, calculate the EP weight: X ounces ÷ $2.07 (AP Price) = 16 ounces ÷ 3.51 Or X ounces = 16 ounces ÷ 3.51 × 2.07 Or X ounces = 9.4 EP ounces (the yield per AP pound)

  15. Yield Tests Now calculate the percentage yield: 9.4 ounces ÷ 16 ounces × 100 = 59% Answer: Yield percentage is 59% Alternative method for solving: $2.07 (AP price) ÷ $3.07 (EP cost) × 100 = 59%

  16. Sales Forecasting • For Regular Sales -- Historical Data • Taken from point-of-sale system (POS) • Menu Mix Percentage or Popularity Index (calculated by dividing the number of times an item is served in a given time by the total meals served)

  17. Sales Forecasting Steak Ranch Restaurant Over the past 12 Wednesdays, 19 percent of the guests ordered prime rib dinners. Next Wednesday, 268 guests are expected. How many prime rib dinners should be prepared?

  18. Sales Forecasting Answer: 286 × 19% = 55 prime rib dinners • Plus a few more: • Mistakes • Mix of rare, medium and well-done and end-cut servings • May have extras because of the number of servings in a roast

  19. Sales Forecasting • For Catering Sales – determine what you need, inflate it a bit and prepare the purchase order • Challenge #1 – more guests than guaranteed • Challenge #2 – all-you-can-eat buffet

  20. Order Size There is a simple formula: EP amount needed ÷ edible yield percentage = AP amount to order

  21. Order Size Broccoli Example 4-ounce servings (EP) 75% yield percentage 600 guests 4 ounces × 600 = 2,400 2,400 ÷ .75 = 3,200 ounces (3,200 ÷ 16 = 200) Should order just over 200 pounds (AP) to serve a 4-ounce portion of broccoli florets to 600 guests

  22. Order Size • As mentioned before: you should always order a bit more than you need • Waste • Pilferage • Can’t always order exact amount you need because of packaging, may end up ordering more anyway • Stockout is not in our vocabulary

  23. Order Size Wine Example 5 ounce serving (EP) Waste is 10% of each 750 ml bottle Estimated 100 glasses will sell per day How many bottles should you order in one week?

  24. Order Size Wine Example – Answer 5 servable ounces ÷ .90 = 5.5 ounces (AP) 25.4 ounces (AP) ÷ 5.5 ounces (AP) = 4.6 drinks per bottle 700 (# of drinks sold per week) ÷ 4.6 = 152.2 bottles You will need to order 13 cases or 156 bottles of wine for the week

  25. Adjustments to Order Size • When ordering, take into account your existing inventory. Subtract what you have on hand that is usable from the order size for a product

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