Purchasing and Inventory Flashcards

Which inventory valuation method assumes the most recently purchased items are sold first?

Answer: LIFO

LIFO (Last In, First Out) assumes the newest inventory is used first, which affects reported cost of goods sold.

An operation's average inventory is $12,000 and annual COGS is $144,000. What is the inventory turnover rate?

Answer: 12 times per year

Inventory turnover = COGS ÷ Average inventory = $144,000 ÷ $12,000 = 12 times per year.

Which of the following is a key advantage of using a group purchasing organization (GPO)?

Answer: Lower prices through combined buying volume

GPOs leverage the collective purchasing power of many members to negotiate lower prices from suppliers.

Fresh whole chickens delivered to a foodservice operation should be received at or below which internal temperature?

Answer: 40°F (4°C)

Poultry must be received at 40°F (4°C) or below per FDA Food Code requirements to prevent pathogen growth.

What does 'economic order quantity' (EOQ) help a foodservice manager determine?

Answer: The optimal order size that minimizes total ordering and holding costs

EOQ calculates the order size that balances ordering costs against inventory carrying costs to minimize total expense.

Which practice helps prevent theft during the receiving process?

Answer: Using a blind receiving system where the receiver counts items independently

Blind receiving requires the receiver to count and weigh items independently without seeing the invoice, reducing collusion and theft.

A foodservice manager discovers that actual food cost is consistently higher than the standard food cost percentage. This variance MOST likely indicates:

Answer: Excessive waste, over-portioning, or theft

A positive variance between actual and standard food cost typically signals waste, portioning errors, spoilage, or theft.