CEH Budgeting & Inventory Control 4 — Questions and Answers
Question 1: Which of the following BEST describes a 'blanket purchase order' in housekeeping supply procurement?
- A one-time order for all supplies needed in a single quarter
- A standing agreement with a vendor to supply goods at a set price over a defined period (Correct answer)
- An emergency order placed outside normal procurement channels
- An order that covers all departments in the hotel simultaneously
Correct answer: A standing agreement with a vendor to supply goods at a set price over a defined period
A blanket purchase order establishes a long-term supply agreement at negotiated prices, streamlining reorders without new negotiations each time.
Question 2: When conducting a cost-benefit analysis for new housekeeping equipment, an executive housekeeper should compare:
- Only the purchase price against the manufacturer's warranty period
- The total cost of ownership against the projected labor and efficiency savings (Correct answer)
- The equipment's aesthetic design against brand reputation
- The vendor's delivery time against competitor pricing alone
Correct answer: The total cost of ownership against the projected labor and efficiency savings
Total cost of ownership—including purchase, maintenance, and operating costs—compared to labor savings provides a complete financial picture for decision-making.
Question 3: An executive housekeeper notices that the actual number of pounds of laundry processed is 10% below forecast despite normal occupancy. What is the MOST likely explanation?
- Laundry equipment is operating at peak efficiency
- Guests are requesting fewer linen changes than anticipated (Correct answer)
- The forecasting model overestimated guest departure rates
- Staff overtime is reducing the amount of laundry processed
Correct answer: Guests are requesting fewer linen changes than anticipated
A lower-than-expected laundry volume at normal occupancy often indicates guests are opting for fewer linen refreshes, commonly through green initiative programs.
Question 4: In the context of housekeeping budgeting, what is 'encumbrance accounting'?
- Recording expenses only when payment is made
- Reserving funds in the budget when a purchase order is issued, before the invoice arrives (Correct answer)
- Adding a 10% contingency to all line items
- Tracking lost or stolen inventory as a separate budget category
Correct answer: Reserving funds in the budget when a purchase order is issued, before the invoice arrives
Encumbrance accounting commits budget funds at the time of purchase order creation, preventing overspending before invoices are received.
Question 5: Which metric BEST helps an executive housekeeper evaluate staff labor productivity in relation to budget?
- Total payroll cost for the month
- Labor cost per occupied room compared to budgeted labor cost per occupied room (Correct answer)
- Number of rooms cleaned per property
- Total hours worked divided by number of employees
Correct answer: Labor cost per occupied room compared to budgeted labor cost per occupied room
Comparing actual to budgeted labor cost per occupied room normalizes productivity measurement against occupancy, isolating true efficiency.
Question 6: A hotel switches from a centralized linen storage system to a floor linen closet system. What is the MOST likely impact on inventory requirements?
- Total linen inventory needed decreases significantly
- Total linen inventory needed increases to stock each floor closet (Correct answer)
- Inventory costs remain unchanged since the same linens are used
- Par levels can be eliminated because floor closets self-regulate
Correct answer: Total linen inventory needed increases to stock each floor closet
Distributing linen across multiple floor closets requires higher total quantities to maintain adequate par at each location.
Question 7: What is the purpose of a 'shrinkage allowance' in a housekeeping linen budget?
- To fund fabric softener and conditioner treatments
- To account for expected losses due to theft, damage, and wear beyond normal lifecycle (Correct answer)
- To cover the cost of purchasing oversized linens that shrink after laundering
- To budget for guest linen purchase requests
Correct answer: To account for expected losses due to theft, damage, and wear beyond normal lifecycle
A shrinkage allowance anticipates predictable losses from pilferage, damage, and attrition, ensuring the budget realistically reflects total linen costs.
CEH Budgeting & Inventory Control 4
Which of the following BEST describes a 'blanket purchase order' in housekeeping supply procurement?