NHM 373 Addendum-How Much to Buy (Spring 2013)

NHM 373 Addendum-How Much to Buy (Spring 2013) - Addendum...

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Addendum to Purchasing How Much to Purchase Calcualtions?
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How Much To Buy? How many pounds of fruits must you purchase to make 200 smiling fruit plates like this?
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Determining the Ordering Needs Main Tool? -The menu Other factors: Current inventory Level of preparation required Coordination of efforts between departments Forecasting sales volume
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Determining Quantity to Order 1. Par Stock Approach (Min/Max) p. 76 Minimum (Par level) - least no. of item that should be in stock at any one time Also called “Reorder Point” (ROP) Maximum - highest no. of items that should be in storage at any time
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Considerations for establishing Par Levels (p. 76) Sales projections Lead time # deliveries per week Storage space Money (credit) Cost of items Perishability / shelf life Exclusively focuses on Par Level Does not consider cost of Food, storage, ordering
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Quantity to Order 2. Levinson Method (p 77-78) Based on: consumed portion size (PF) and related item’s sales volume . Portion Factor (PF) # portions (svg) from a given product (sum) Total weight = PF Amount one serving
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PD (portion Divider) # portions available after the item’s edible yield is taken into account . PF x Ingredients edible yield % = PD Items’ Usage = Order Size (Qty) Ingredient PD See activities (p. 79)
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Levinson Method You calculated 2,175 boneless, 6-oz chicken breast are needed for the next period. 1. Determine the raw pounds of ingredient needed? PF = Raw amount = 16 oz = 2.67 amt in 1 svg 6 oz PD = PF x Ingredient edible yield% 2.67 x 80% = 2.14
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Once the PF and PD are calculated, determine the order size. Order = # customers (servings) = 2,175 = 1016.355 lbs Size Ingredient’s PD 2.14
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Determining Qty to Order 3. Economic Order Quantity (EOQ) - calculated considering order cost, usage, item cost, and storage cost Calculated in 2 ways: (p. 80-81) EOQ in dollars EOQ in number of units Best used for: Large quantities Non-perishable items Low turnover items When storage space is sufficient
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Quantity to Purchase Guided by Forecasting – art or science of estimating future events Based on: 1. Historical Records- – written accounts of previous events (sales record, census sheet, etc) 2. Forecasting Models- – mathematical formula to predict future needs.
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Forecasting Models Time series model – assumes that actual occurrences follow an identifiable pattern over time 1. Moving average Uses a repetitive process for developing a trend line Used only on the same menu item 2. Exponential smoothing - decreasing set of weights is used, giving recent values more weight than older ones Only data required are wt, most recent forecast, and most recent actual value Choose model that is suitable for particular situation
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Moving Average Using a 3-day moving average, forecast the expected sales for chicken on Fri and Sat.
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