CDM Purchasing and Inventory Control 2 — Questions and Answers
Question 1: Which purchasing method involves soliciting competitive bids from multiple vendors for large-quantity orders?
- Open market buying
- Competitive bid purchasing (Correct answer)
- Prime vendor agreement
- Cost-plus purchasing
Correct answer: Competitive bid purchasing
Competitive bid purchasing requires vendors to submit sealed bids for specified products and quantities, with the contract typically awarded to the lowest qualified bidder.
Competitive bid purchasing is a formal procurement method where the dietary department issues detailed product specifications and quantity requirements, and qualified vendors submit sealed price bids. This method is often required for purchases above a certain dollar threshold and is standard in government-funded facilities. The process includes writing clear specifications, issuing bid invitations, evaluating bids, awarding the contract, and monitoring vendor compliance.
Question 2: What does the term 'par level' refer to in inventory management?
- The minimum quantity of an item that should be in stock at all times (Correct answer)
- The maximum shelf life of a product
- The ideal storage temperature
- The number of vendors for each product
Correct answer: The minimum quantity of an item that should be in stock at all times
Par level is the predetermined minimum quantity of each inventory item that should be maintained in stock to ensure adequate supply between deliveries.
Par levels represent the minimum quantity of each product that should be available in inventory at all times. They are established based on usage rates, delivery frequency, lead times, and a safety stock buffer. When inventory drops to the par level, a reorder is triggered. Par levels should be reviewed and adjusted periodically based on menu changes, census fluctuations, and seasonal demand.
Question 3: Which document specifies the exact quality standards, grade, size, and other requirements for products to be purchased?
- Purchase order
- Product specification (Correct answer)
- Invoice
- Receiving report
Correct answer: Product specification
Product specifications are detailed written descriptions that define the exact quality, grade, size, brand, pack, and other requirements for each item to be purchased.
Product specifications define every quality attribute required for each purchased item. Specifications typically include: product name, federal quality grade, brand name or approved equal, pack size, unit of purchase, processing form, trim and cut, and any special requirements. Well-written specifications ensure consistent quality regardless of vendor, provide objective criteria for receiving inspection, and enable fair price comparison.
Question 4: What is the primary purpose of conducting regular physical inventory counts?
- To reorganize storage areas
- To verify that actual stock levels match recorded inventory records (Correct answer)
- To train new receiving staff
- To identify expired products only
Correct answer: To verify that actual stock levels match recorded inventory records
Physical inventory counts verify that actual quantities on hand match book inventory, identifying discrepancies that may indicate theft, waste, recording errors, or spoilage.
Physical inventory counts involve manually counting every item in storage and comparing actual quantities against recorded inventory. Discrepancies reveal problems: shrinkage from theft, unrecorded spoilage, receiving errors, or recording errors. Most dietary departments conduct full physical inventories monthly. The inventory value from physical counts is used for financial statements and food cost calculations.
Question 5: Which receiving practice is essential for ensuring food safety of delivered products?
- Accepting all deliveries without inspection to save time
- Checking temperatures of refrigerated and frozen items upon delivery (Correct answer)
- Storing items before counting
- Relying on the driver's temperature logs only
Correct answer: Checking temperatures of refrigerated and frozen items upon delivery
Checking temperatures of refrigerated and frozen products at delivery is essential to ensure cold chain integrity and food safety compliance.
Temperature verification at receiving is the first critical control point in the foodservice flow of food. Refrigerated products should arrive at 41 degrees F or below, and frozen products should be solidly frozen with no evidence of thawing and refreezing. Additional receiving checks include: verifying quantities against purchase orders, inspecting packaging integrity, checking expiration dates, and examining product quality. Products that fail checks should be rejected and documented immediately.
Question 6: What is the economic order quantity (EOQ) concept in purchasing?
- Buying the maximum quantity available at the lowest price
- The order quantity that minimizes total inventory costs (ordering plus holding) (Correct answer)
- The amount ordered when inventory reaches zero
- The quantity specified in the prime vendor contract
Correct answer: The order quantity that minimizes total inventory costs (ordering plus holding)
Economic Order Quantity is the optimal order quantity that minimizes the combined costs of ordering and holding inventory.
The Economic Order Quantity model calculates the order size that minimizes total inventory costs. Two opposing costs are balanced: ordering costs decrease with larger, less frequent orders, while holding costs increase with larger inventories. The underlying concept guides purchasing decisions: ordering too frequently wastes administrative resources, while ordering too much ties up capital and increases waste risk.
CDM Purchasing and Inventory Control 2
Which purchasing method involves soliciting competitive bids from multiple vendors for large-quantity orders?