Material Management

BONOPHOOL BANERJEE 1
Material Management
“Material Management can be defined as that

aspect of the management function which is
primarily concerned with the acquisition, control
and use of material needed and flow of goods and
services connected with production process having
some predetermined objectives in view”.
Objectives:
A. Primary:
This will include provisioning of material in specified quantity at

economic cost and the maintenance of continuity of supply and
minimizing investment and cost of investment and assurance of high
inventory turnover.
B. Secondary:
Secondary objective will include:
I. Locating new sources of supply.

II. Achieving a reduction in cost through such techniques as variety
reduction, simplification, standardization and quality
III. Coordinating such functions as planning and scheduling, storage,
upkeep and maintenance of material, material handling and traffic etc.
IV. Developing skills and personnel under material management.
PHASES OF MATERIAL MANAGEMENT
(A) “PLANNING” PHASE

(B) “OPERATIONAL” PHASE
(C) “MANAGEMENT CONTROL AFTER THE EVENT”
PHASE
(A) PLANNING PHASE
(a) Financial policy
(b) Marketing policy

 Customer
 National Identity
 Market Share
 Turnover
 Profitability
 Av. spending power
 Product
 Customer satisfaction
(c) Catering policy

 Type of customer
 Type of menu
 Type of service
 Degree of comfort
 Food quality standards
 Beverage provision
 Method of buying
(B) OPERATIONAL PHASE
 Purchase
 Receiving
 Stores / Issuing
 Preparation
 Selling
(C) “MANAGEMENT CONTROL AFTER THE EVENT”

PHASE
Food & Beverage cost reporting

Assessment
Correction
PURCHASE
Purchase can be defined as a Function concerned with the search,

selection, purchase, receipt, storage & final use of commodity in
accordance with the policy of the establishment.
IMPORTANCE OF PURCHASE
Purchasing plays a very important role in the Food and Beverage control
cycle.
1. Purchased department in a unit is an integral part of the total material

required planning, procurement and control. Although this
department does not produce any tangible service for the guest, but it
is a major back up for all the operating departments which ultimately
serve to the guest – each thing is procured by this department.
2. Another important aspect of this department is it’s affect on the total

profitability of the hotel. Purchase being the only department which
is directly incurring expenses on behalf f the requirements of all the
other departments, even 1% saving on the cost adds on to the gross
profit of the hotel and vice-versa.
3. This department is run by the minimum number of manpower in the

whole hotel yet carries out one of the most important task of
purchasing, to smoothen the operations, enhance the quality and guest
satisfaction with total cost management
FACTORS FOR EFFECTIVE PURCHASING
There are four guiding factors for effective purchasing:
1. What a) What do you need?

b) What quantities do you need?
c) What Quality do you need?
2. When a) When do you need the food items?
3. Where a) Where will you buy the food items?

b) Where will you store it?
4. Why a) Why do you need the item?

b) Why do you need the particular quality or grade?
Another way of looking at them would be:
INTERNAL FACTORS:
A) Past total consumption of the commodity

B) Past rate of the consumption
C) Anticipated rate of the consumption
D) Cost of carrying the inventory.
E) Economic order quantity
F) Availability of storage space
EXTERNAL FACTORS
A) Suppliers- Competition of the commodity

B) Seasonality of the good/ commodity
C) Lead-time.
WORK FLOW IN PURCHASE
The following steps lead to a purchase:
1. Genuine need for an item/s by the user department-
Regular items like groceries, stationary etc. all directly issued by the store.
Any special item like curtains, Lampshades etc. whenever required are
routed to the purchase department.
There has to be a reason behind the requirement of any particular item, as
there is a cost factor involved with purchase worth 1 rupee also
2. Indenting
Each department has been provided purchase indent forms which are filled
in , clearly stating the quantity and quality.
All the purchase indents have to be signed by the HOD and approved by the
GM and the UFC.
These indent forms are then passed on to the purchase department. The
stores also make their indent and get it approved by the stores Manager and
the F&B controller before passing it on to the purchase department.
The purchase indent forms are serially numbered and made in
triplicate out of which one copy goes to the purchase department.
3. Procurement
This is the most sensitive activity in the purchase, as one should know from
where to buy for the desired quality paying the lowest possible price. Cash
or credit, the latter being more preferable, can do purchase.
Purchasing can be done direct by going to the market by the Purchase staff
or by inviting tenders and purchasing from the lowest bidder or by inviting
quotations and having an annual, bi-annual or quarterly contract.
Generally a market survey is conducted before settling for a product. The
decision is usually taken by a purchase committee, which consists of
Purchase Manager/ UFC/ HOD (user).
4. Receiving
Receiving the quantity and quality as per the purchase order is the function
performed by Receiving. The purchase has to follow up on delivery
schedule as per the terms agreed upon.
METHODS OF PURCHASING
I. FORMAL
Terms and conditions are laid down in writing between the supplier and the
purchaser.
Formal method of purchasing can be sub divided into two types:
a) By Contract
b) By Quotation Sheets
By Contract
1. The Specific Period contract
Which aims at determining the source of supply and the price of goods for a
stated period of time, often 3 to 6 months. This reduces the time and labor
of negotiating and ordering to a minimum. Plus it has the added advantage
of assisting with budgeting and pricing, when the price of items is fixed for a
period of time. Items with a fairly stable price e.g. Milk, cream, Bread,
Biscuits etc. can be contracted in this way.
2. The Quantity contract
Which aims at ensuring continuity of supply of a given quantity of an

essential item at an agreed price over a particular trading period. The
purchase of Frozen food and vegetable for use in banqueting or in summer
season are typical examples when the supply could be affected by the weather
conditions which subsequent price fluctuations and where quantity contract is
preferably used.
SHOULDS OF A CONTRACT
1. Mention the period of contract.

2. Estimate quantities as accurately as possible
3. Reservation of the establishment to divide a contract, if necessary between
the suppliers
4. Purchase specification
5. Removal of Rejected food
6. Container chargeable must be creditable to the establishment in full when
returned
7. Power to purchase in default
8. Indemnity against damage
9. Place of time and delivery
10.Prevention of corruption
11.Service to break a contract
12.In case of major dispute that the decision of an agreed independent body
should be accepted by both the parties
13.Invoices to be supplied within a specified time after delivery to a particular
address
14.Payment of invoices
By Quotation Sheets
1. Daily for perishable goods where freshness counts e.g., vegetable

and fruits
2. Weekly/ Bi-weekly for grocery commodities
BY INVITING TENDERS
This is another method of awarding the contract for an item

where the tenders are invited, opened on the same day and the lowest bidder
is given the contract.
This procedure is not followed in ITC Maurya Sheraton as the
purchase committee is left with very little discretion. A Supplier who is into
unfair trade practice or irregular in supplies may get the contract being the
lowest bidder. Many a time the quality also suffers hence it is advisable to
0go in for quotations rather then tenders.
For meat and perishables such purchase orders are not made.
The daily meat/perishable requirement is filled up by the executive chef and
sent to the purchased department along with the cafeteria order sheet.
Orders are placed on the telephone and one copy is sent to the receiving to
receive the goods the next day.
ADVANTAGES OF FORMAL METHOD OF PURCHASING
1. No cost fluctuation
2. Man power not required for searching and selecting of commodity
DISADVANTAGES OF FORMAL METHOD OF PURCHASING
1. Non-seasonal items generally not supplied.

II. INFORMAL:
No formal terms and conditions

Informal method of purchasing can be sub divided into two types
a.) OPEN MARKET

Usually done for provision and utility purchased by small hotels when
ready-made suppliers are not available.
STEPS INVOLVED:
1. Setting up for a purchase committee consisting of one member each

from kitchen, stores, accounts and controls.
2. Potential supplier are identified in the market
3. Quotations are given and samples are collected
4. Orders are placed as per the tenders (no contract undertaken)
b.) CASH AND CARRY

This method is of particular interest to the medium and small establishment
whose orders are often not large enough to be able to get regular deliveries
from wholesalers and food manufactures.
c) DIRECT PURCHASING
Big good service establishments because of the following reasons usually
avoid this method of purchasing:
1 Time and manpower consumed makes it impractical

2 Credit usually not allowed
3 The desired quality may not be possible always
ADVANTAGES OF INFORMAL METHOD OF PURCHASING
1. Competitive pricing even for small volume

2. Sampling it easier
3. Vast range of commodities and their alternative together help
prompt and economical decisions.
4. Seasonal rates can be availed
5. Each purchase goes through a selection process hence quality is
ensured
6. Discounts on cash and rebates on quantity can be availed
DISADVANTAGES OF INFORMAL METHOD OF PURCHASING
1. Extra manpower required because purchasing is done at the

occurrence of each need.
2. Cost fluctuation in long run therefore expensive.
PROCEDURE FOR ANNUAL CONTRACTS
1. Inviting of quotations through and advertisement in the news paper
2. Quotation form along with the purchase specification with general

terms and conditions is picked up by the supplier from the purchase
office
3. Quotation is filled up and sent back to the purchase deptt. The receipt
and issue of quotation form is noted down in a register
4. All the quotations received and recorded in a comparative statement,

along with the last year rates
5. Quotations are further verified by the purchase manager, F&B

controller and the concerned head of the department
6. Rates are further negotiated by the supplier along with general terms
and condition, and the delivery schedules
THE CLAUSED TO BE INCLUDED IN PURCHASING BY

CONTRACTS ARE
1. The name of the supplier

2. Name of the item
3. Covering letter
4. Rate
5. Quantity
6. Specification
7. Indenting
8. Delivery
9. Documentation Invoice/ Bill
10. Payment
11. Security Deposit
12. Quality
13. Failure of Supply
14. Non Supply according to SPS
15. Improper quality or quantity
16. Validity
17. Name and signature of Purchase manager
PURCHASE ITEMS
FOOD AND BEVERAGE

These items can further be classified into:
A. PERISHABLES
They can be further divided into:
1. Meat, Poultry and eggs

2. Vegetables, Fruits, Milk and Milk products
B. NON PERISHABLES
They can be further divided into:
1. Cereals, pulses and spices

2. Beverages
ENGINEERING
All engineering items fall under this category
GENERAL
All items apart from food, Beverage and Engineering fall under this category
e.g. stationary, housekeeping items. Etc.
DUTIES OF THE PURCHASE MANAGER
1. Responsibilities for the management of the purchasing office, the

receiving, storage and cellar areas
2. The purchasing of all commodities
3. Ensuring continuity of supply of all items of user departments.
4. Keeping up to date with all the markets being dealt with and
evaluating new products
5. Research into products, markets, price trends etc.
6. Coordinating with production departments to standardize
commodities and therefore reduce stock levels
7. Liaising with production, control, accounts and marketing.
PRIME RESPONSIBILITIES OF PURCHASING
1. Buying (i.e. The goods needed)

2. Development of new suppliers
3. Purchasing research which involves:
 Studying and search of market, materials
 Cost analysis, which covers storage loss, preparation loss,
cooking loss and changes in the catering cost.
 Value analysis: It could result in substituting a high priced
ingredients with low priced ingredients without sacrificing
quality
HOW TO SELECT AND RATE A SUPPLIER
It can be done on the basis of
1. Suppliers reputation in the trade

2. Investigation
3. Comparison or a combination
It is necessary to collect the following:
a) Full details of the firms and their customers

b) Printed copies of their recent price list
c) Trading terms
d) Samples t o taste
e) A visit to the new firm
PURCHASE ORDER
A purchase order is a contract made between the buyer and the

Supplier and hence should be specific in terms of essentials as
follows:
1. ` Serially numbered and pre printed

 Hotel’s name and full address
 Details of the company’s registered office
 Suppliers name and full address
 Date of purchase order release
 Supplier’s quotation reference and date
2.
 Item description and code number
 Suppliers code number and brand
 If it is and engineering item, part number and relation to
Parent equipment
 Unit of Purchase
 Rate per unit in Rupees
 Quantity of goods ordered in rupees
 Value of the quantity ordered in rupees
 Govt. taxes and duties if payable extra clause
3.
 Delivery schedule/ date
 Packing specifications
 Packing charges- payment clause
4.
 Handling charges- payment clause
 Dispatch details
 Billing instructions/ Documentation
 Terms of payment
5.
For food and Beverage items:
a. PFA Clause: pls. Attach warranty under Rule 12A of
PFA Act 37 of 1954. This warranty should accompany
all food merchandise supplied.
b. Batch number/ manufacturing date must be shown in
the suppliers bill when the concerned goods are
supplied (for all tinned/ canned and packed goods
6.
Engineering goods and other consumer durables:
a. Guarantee/ warranty cards from the manufactures/
supplier/ dealer should be furnished along with
deliveries
7.
Authority:
a. Signature of the purchase manager/ Purchase executive
b. Signature of the purchase manager and signature of the
hotel controller/ GM only for purchase order of the
value exceeding limits prescribed for Purchase
manager/ Executive
8.
Acknowledgement by the supplier for having accepted all terms and
conditions only on the original at the bottom perforated portion
detachable.
9.
Purchase order Distribution: (At least 5 copies needed)
1. Original (White)- for supplier
2. Duplicate (pink)- For accounts payable
3. Triplicate (green)- For master file in Purchase department
4. Quadruplicate (white)- for receiving section
5. Quintuplicate (Yellow)- for purchase follow up
6. Sexuplicate (white)- for indenter if required
All copies except the original to show at the bottom- indent No/ date and
indenter name
Also to show price justification- L.P.P. comparative statement, reference
rate, negotiation details etc
10.
Confirmatory order
Only for regularization after complying with all procedures of finalization
To show in Bold letters CONFIRMATORY and underlined on all copies
D.R.R> no/ cash memo reference or supplier’s bill reference should be
shown in the space for supplier’s quotation reference.
11.
Other statutory terms and conditions printed on the reverse of the
Purchase order forma are compulsory and supplier’s attention should be
invited to these by clause on the first page itself e.g. ``pls. also read
carefully the terms and conditions printed on the reverse of this purchase
order’’.
TERMS AND CONDITIONS RELATED TO THE SUPPLIER
1. Railway Risk / Parcel way Bills
All goods to be dispatched by railway shall be consigned at Railway risk

unless otherwise stated in writing. The R & R’s must be released within four
days of the date of dispatch of goods and PWB’s within one day. The hotel
shall not be liable for damage/ wastage for any reason other than our willful
default. RR’s / PWB’s must be sent to us by registered post.
2. Challan/ Advice notes
Two copies must be sent with RR’s / PWB’s the challan / advise notes.
3. Packing Slip
A packing slip listing contents must be inserted in each package
4. Invoice
A detailed, priced invoice, in duplicate in respect of each order showing
discount etc. must be sent as soon as possible after dispatch to this office
unless otherwise agreed upon. Separate invoice in the above manner should
be prepared and submitted for goods delivered against different orders. All
invoices/ bills must be sent in duplicate and should be typed or written in ink
or indelible pencil and signed.
5. Specifications
All goods must strictly be of the stipulated quantity, description,
specification, weight and measurement of approved specimen.
All goods dispatched must be subject to our approval as to quantity,

description, weight measurement and quality as herein mentioned and also
subject to our satisfaction that goods are in accordance with approved
specimen. The goods will otherwise be liable to rejection by us.
6. Packing and forwarding charges
Unless previously approved by us, packing and forwarding charges will not
be paid.
7. Terms of Payment
Subject to your complying with the above terms and conditions, payment of
bulls will, in accordance with our normal practice, be arranged within 30
days of receipt of the goods at destination unless otherwise agreed upon. If
the foregoing instructions are not strictly adhered to , settlement of your bill
may be delayed.
8. Delivery
Time of delivery is of importance and on failure to make delivery on or
before stipulated date the company reserves the right to cancel the order.
9. Insurance
Not required until otherwise stated
10. Risk and Title

The risk and title to the goods shall pass to the company only on our
approval of the goods as mentioned in 5 above
11. Sales Tax

Sales tax registration number has to be shown on the invoice.
PROCEDURE FOR ISSUE OF PURCHASE ORDER
These procedures apply to the purchase of all merchandise except those

Food And Beverage items, which are on the annual contract
1. Every purchase decision shall, prior to the placement of the order,

be approved by:
a) For all merchandise other then Capital expenditure items for an order
value of Rs. 10,000 - Unit Purchase manager
b) For an order value of Rs. 10,001/- to- RS. 50, 000 - Unit Purchase
manager and Unit Financial controller -
c) For an order value of more than Rs1, 00,000/-. - Hotel Purchase

committee
2. For all Capital Expenditure items:
1. The Hotel’s Capital Expenditure committee as specified by divisional

accounting policy
2. Formal Purchase orders will be issued in respects of all purchases of a

Rupee value of Rs. 100/- or more from a single vendor/ source on a
single day.
3. The Purchase Manager will sign all Purchase orders. In addition, all
purchase orders above Rs. 5000/- in value will be signed by the Hotel
controller and or the Hotel GM
4. All purchase orders raised must be on the standard Welcomgroup

format. This is 6-part snap out form, with black carbon inserts, which
is distributed as stated earlier.
5. In the event any emergency orders are placed on the telephone, the
purchase order is to be prepared immediately and distributed through
channels for approval prior to the delivery of the merchandise.
6. The Purchase order is not to be used as a `` Confirmation’’ of

previously received merchandise, made up from invoices. In the
event this procedure is violated, the following additional procedures
will apply:
a. The Receiving Deptt. will accept delivery of the merchandise
only with the written approval of the Purchase manager.
b. A Purchase order will be raised clearly indication
``confirmatory’’ on the face of the order.
c. The invoice, when received, can be approved for payment only
by the Hotel controller/ GM
GUIDELINES FOR FLOATING OF ENQUIRIES/ TENDERS
The guidelines given below are applicable to purchases of goods as well as

of services:
A. Central Purchase
From time to time the manager Central purchase will circulate through the
Sr. VP/ Divisional Financial controller, a list of items to be procured
centrally. All such notified items will be procured only through HDHQ-
Central purchase department and not directly by the hotels.
B. Unit Purchase
All Purchases will be negotiated and finalized under different broad

purchasing processes as listed below
a. General open tender/ enquiry

 Fish and Seafood
 Milk Vegetables and fruits
 Meat
 Poultry
b. Selected limited tender/ Enquiry from list of approved suppliers/

vendors
 Carpets
 Curtain and upholstery
 Dairy products
 Engineering maintenance
 Glassware
 Tailoring contracts
 Guest supplies
 Linen
 Spices and condiments
 Tailoring contracts
 Utensils
 Pest control contracts
 Graphics
 Hollowware
c. Individual or restricted negotiation with identified and approved

supplier/ vendors/contractors
 Alcoholic Beverages
 Band / Performance contracts
 Bottled juices/ Squashes
 Cable TV Software contracts
 Car/ bus/ vehicle hire contracts
 Cigarettes
 Pickles and sauces
 Soft drinks
 Tinned and other banned foods
1. The above parameters of purchasing processes and nature of

purchases are only indicative and not exhaustive. All hotels must
attempt to follow the purchasing process specified for each nature of
purchase. In the event this is not possible and hotels are contained to
follow a purchase process other than the one specified, then the
transaction must be authorized by the purchase Committee. A note on
file must be kept enumerating the basis and rationale of the purchase
finalization.
2. Each hotel will maintain a list of approved suppliers/ vendors/

contractors.
3. Tenders/ Enquiries shall be sought in writing for general open tenders

and quotations received in writing under sealed cover.
4. For selected Limited tender/ Enquiry, the same must be sought from at
least three approve suppliers/ vendors/ contractors
5. Unless the purchase/ annual purchase contract is finalized on the basis
of the lowest quotation or below, file note in writing shall be kept of
the basis and rationale of the purchase finalization.
6. A Comparative statement format may be used for recording the

decision logic for all purchased. This format facilitates circulation as
well as acts as a note on file wherein the comments of the Purchase
committee members can be recorded.
STANDARD SPECIFICATIONS
A standard specification is a concise description of the quality, size and

Weight (or count) required for a particulate item. Each specification would
be particular to an establishment and would have been determined by
members of the management team i.e. the purchase manager, Executive
Chef and The F&B manager with reference to the catering policy, the menu
requirements and its price range.
The reason for preparing specifications is:

1. It establishes a buying standard of a commodity so that a standard
product is available for the kitchen and restaurant to prepare for the
customer.
2. It informs the supplier in writing of precisely what is required and it
assists the supplier in being competitive with the pricing.
3. It provided detailed information to the receiving and the stores as to
the standards of the foods to be received and stored.
4. Specifications are easy to write when there is official recognized
grading scheme for the particular commodity. It is necessary,
however, to know and understand the grading system fully to be able
to obtain the maximum benefit
When writing specifications it is convenient to write them in a

standard form giving the following information:
b. Definition of the item. Care should be taken that the catering

terms used by the buyer are the same as used by the supplier
c. Grade or Brand name e.g. Apples- Grade extra class
d. Weight, size or count e.g. Kilogram
e. Unit against which prices should be quoted e.g. Per kg etc.
PURCHASE PROCEDURE FOR WINE, BEER AND SPIRITS
In case of alcoholic beverages, the steps involved may vary slightly

and additional caution is required since most alcoholic beverages are
highly costly items:
Purchasing of alcoholic beverage is an investment in income
producing stock. Therefore if proper control is not maintained it
would result in loss as alcohol has an irresistible attraction for many
people. The goal of beverage purchasing is to provide a steady supply
of ingredients for the drinks you sell, at costs that will maximize
profits. The purchasing function is a continuous cycle and includes
the following phases:
12. Planning and Ordering

Selecting at the most advantageous price.
13. Receiving
Taking exact delivery of the order- brands, sizes, quantities, prices etc.
14. Storing
Keeping beverage supplies secure against theft and deterioration.
15. Issuing
Transferring beverage from the storeroom to the bar.
PLANNING THE PURCHASE
1) Quality of Beverage- This depends upon the

clientele and what they expect. The quality of well brands has also to be
considered. It is advisable to use familiar well-known brands as well
brands to ensure consistency.
2) Variety of items to be stocked- Liquor that does
not sell does not earn a penny of profit. It is preferable to limit the variety
offered to popular and well advertised brands of each item
WHERE TO BUY
State laws and local laws govern this decision. Secondly it must be
purchased from License suppliers.
QUESTIONS TO BE ASKED ARE

1. How much to Buy?
2. When to Buy?
3. What to Buy?
4. What to Pay?
HOTEL PURCHASE COMMITTEE
1. The hotel Purchase committee will consist of the following three

members of the management:
The GM,The Hotel Controller and The Purchase Manager
2. The committee will perform the following functions:

a. Approval of price changes in existing orders
b. Approval of orders for new products or brands, change in
operational supplies
c. Review of periodic contracts for supply of foods, perishable
and groceries.
d. Approval of increased stock levels
e. Approval of new vendors or discard of old vendors
f. Approval of orders relating to renewals, replacements and
capital items within the overall budget sanctions
g. Approval of all orders above Rs. 10,000/-
3. The purchase Manager will act as secretary of the committee and

all administrative work entailed for he will discharge performance
of eh above functions.
4. Meeting will be held as and when required, but the committee
would be deemed to have met and discharges its function if
matters requiring approvals are so approved by circularization and
the members have put their signatures signifying their consent.
5. Wherever necessary, the Purchase Committee will invite user

department Heads to sit in on their deliberations.
ORDERING OF RATE CONTRACTED FOOD MERCHANDISE
This procedure will apply to all raw material purchases when rate contracts
have been entered into (Usually on an annual basis)
1. While ordering rate-contracted items, it is not necessary to raise
separate purchase orders for each supply.
2. The Executive Chef will raise, each day, a Daily order sheet listing out
all the perishable items that are required be delivered the next day.
3. In hotel s where par stocks of perishable are under store room control,
the daily order sheet will be prepared by the storekeeper and further
approve by the Executive Chef
4. The format of the Daily order sheet will be as under:
Date:
Item Unit Par Stock on hand Qty required
Remarks
Stock
5. The daily order sheet will be prepared in quadruplicate, signed by the
Executive chef or his designated asstt and be distributed as under:
Copy 1 Purchase
Copy 2 Receiving
Copy 3 Ex. Chef
Copy 4 Storeroom
6. Two copies of the Daily order sheet will be sent to the Purchasing for
their action. Purchase will place telephonic orders or hand delivered
orders on the various contracted suppliers
7. Purchase will then fill in the name(s) of the supplier against
item/group of items ordered and forward one copy of the Daily order
sheet to Receiving
8. Receiving will accept delivery of the merchandise on the basis of the
daily order sheet copy passed on by the parties. Any short supply of
other variances I n supply will be intimated to the purchase for their
follow up action
CENTRAL PURCHASE
Many standardized Welcomgroup items are received through the central

purchase which have been divided into three appendices:
Appendix A consists of crockery, bath items, glassware, guest supplies
Appendix B room linen, EPNS, crockery
Appendix C stainless, copper
Procedure
The procedure followed for purchase through central purchase is as follows:

1. Individual hotels raise indent for their annual requirements of all
centralized items, to enable bulk ordering and thereby achieve
economy of scale and also ensure tone and quality. These indents for
annual requirements are submitted at the end of February for the next
financial year and the deliveries are then staggered over 3 to 4
quarters in case of Food and Beverage supplies.
2. Central purchase collates all the indents from units, gets the total
requirements item wise and delivery schedules. Any enquiry or
follow up is done at this stage.
3. Quotation is invited compared and further negotiated by purchase
committee.
4. The purchase orders are made in 6 copies one each for the suppliers,
master file, unit purchase manager, UFC, receiving and follow-up file.
5. Samples of items order are received approved and sent to the units to
compare and select the incoming goods at receiving.
6. Prompt disposal/ return of rejected materials under proper
documentation
7. Payments made to the suppliers
8. Follow-up of delivery as per the schedule with proper receiving and
controls
TENDERING PROCEDURES AND RATE CONTRACTS
Having carried out the market survey and a prelude to the negotiating table,
we invite quotes from the suppliers, offering his price and his terms and
conditions. For this we float tenders, invite quotations and fix up rate
contracts.
Tendering procedures
What is a tender?
A tender is a document prepared by the buyer, which is mainly sold to the

supplier. This document contains information about the product, the
supplier’s price quotations, and regularity of the supplies etc. The tenders
are usually are sealed and opened on a specific date, sometime in the
presence of the suppliers. The rate, quantity etc. are not negotiated once the
tenders are opened. Also it is not necessary that the contracts to be given to
the lowest bidder only.
Quotation
A quotation is a offer from the supplier giving his rates, frequency of

supplies, quality of material etc. A quotation may however be subjected to
some negotiations.
Difference between a tender and a quotation
TENDER QUOTATION
1. A Tender is sent by the buyer to 1. The quotation is an offer made
the supplier asking to him to to the buyer from the supplier
send his offer.
2. The buyer knows exactly what he 2. The inquiry covering various
wants and the specification are products / single product and the
included. specification are given by the
supplier.
3. The formats are received from the 3. The supplier gives his own
buyer. format and quotation is
subjected to negotiations.
4. The tenders are not subjected to 4. They are better for short-term
negotiations. contracts.
5. Tenders are better for long term 5. They are better for short term
Specifics of a Tender
The details of the products must be known in advance and the supplier
should know what is required from him. All the tenders come in sealed
envelopes to the purchase dept. and is opened by the purchase committee
and sometime in the presence of the supplier. The tenders are opened at a
specific date and time, which is given before hand to the supplier while he is
applying for the tender.
It depends on the organizations policy whether to go by the course or by the

tenders. However for volume and long term contract the buyer goes by the
tenders and usually the lowest bidder is accepted, though this need not be
always.
Rate Contracts
A rate contract is a contract for the supply of specific item at a specified rate
agreed upon for the duration of the specified time.
Annual rate contracts are drawn up for all the perishable items. The
procedures followed begins in the month of January
1 January – the advertisements are placed in the newspapers for the

suppliers and the existing vendor based is contacted through mail.
2. February – Sealed tenders / quotations are received and the survery for
the evaluation of the supplier is done.
3. March – the negotiations are carried out with few suppliers selected from
the market survey. Sample supplies are received in the case of change in
specifications.
A contract is entered into between the supplier and the buyer from April 1st
to March 31st of the next year.
A letter of intent is sent to the suppliers and all the details are spelt out
clause wise. This letter is issued on the letter head by the buyer in duplicate
and signed by the purchase manager or any authorize signatory. The
duplicate copy signed by the supplier are returned to the purchase manager.
A deposit may be taken
From the suppliers to cover up all risks of not supplying, not supplying and
legal action may be taken against this. In the hotel industry to ensure regular
and consistent standards of all supply of perishable come under purview of
rate contract. – Meat, poultry, dairy, flowers, fruits & vegetables.
Drawbacks
1. The hotel is a looser in case of price falls
2. A change in standards. Is difficult in the middle of contract.
3. There is not large gain by the hotel
4. Two standards. Are to be prepared – one for the season and other for
the off-season.
Receiving
Receiving is the name given to a sub department of finance responsible for

receiving and recording the entry of any material that comes into the hotel
This department originated for receiving all the materials purchased by the
hotel and transferring it to the stores or the user department but of late it also
records receipts of various materials, which had been taken outside the hotel
for various purpose
The main object of this department is to receive materials exactly according

to the purchase order and specifications, in the right quantity and of desired
quality. Although it is a non-revenue producing department but it is very
much responsible for use of money to get the right value, with immediate
dispatch to the user department and proper storing to retain the value
THE ORGANISATION CHART OF THE DEPARTMENT
ASSISTANT UNIT FINANCIAL CONTROLLER
RECEIVING MANAGER
SENIOR RECEIVING SUPERVISOR
RECEIVING SUPERVISOR
GENERAL WORKERS
CASUALS
OPERATIONS OF RECEIVING
TIMINGS:
0700 hrs. to 0900 hrs (milk supply)
0800 hrs. to 1300 hrs (food and beverage items)
1400 hrs to 1700 hrs (general items)
Workflow in receiving can be divided into three main headings
A) Receiving Food and Beverage Items:
1. The timings for receiving all food and beverage items is strictly
adhered to
2. The first and foremost thing checked here is the quantity and
quality viz –a-viz order placed in case of milk, butter, fruits and
meat.
3. The quantity received is mentioned against quantity ordered in the

daily meat / perishable order sheet
4. All the meat items are examined by the chef before being received
5. All the soft beverage are received buy the stores assistant directly
through receiving
6. A daily receiving report is made for all the food and beverage
items received separately on a particular day
7. The bill or challan is stamped “RECEIVED” and the duplicate

copy is given to the supplier
8. The original copy of the bill along with a copy of daily receiving
report goes to the accounts for payment to the suppliers
9. Perishables are directly dispatched to user departments and stores
10. A rejection / short supply report is made, if required, and circulated

to purchase department and user department for follow up (an
alternate source of supply may have to be quickly found to
minimize any inconvenience to the production department).
11. Food & Beverage controls is also involved in the quality and
quantity checks
The Objective being:
1. To receive the right quantity

2. To receive according to standard specifications as per the purchase
order e.g. checking the grade / or date, etc.
B ) RECEIVING GENERAL ITEMS
1. The quality of the goods received is first examined by the user

department and approved
2. The bill or the challan is stamped “Received” with the date
3. A goods receiving return is prepared in 5 copies
4. The bill along with the GRR is sent to the accounts department fpor
payment
5. For receiving all outstation items an inspection report is prepared
C ) RECEIVING HOTEL GOODS
1. As discussed before, receiving is also responsible for receiving the

hotel material that had been taken out for a specific purpose
2. When such items are taken out a non-returnable gate pass is made and
a copy of which remains with receiving
3. Goods are received in accordance with the gate pass
4. Concerned departments are given reminders at regular time intervals
for pending gate passes
5. For materials received during noon-receiving hours security signs the
bill, on approval of the user department and the goods are dispatched
to the user department immediately.
UNIFORM PROCEDURES FOR RECEIVING AND CONTROL OF

ALL MERCHANDISE
A) CENTRALISED RECEIVING
Except where unusual circumstances require otherwise all deliveries of

merchandise to the hotel are to be made to a central receiving location for
inspection and the preparation of a receiving record before being delivered
elsewhere in the hotel for storage or use.
B ) INSPECTION
The receiving Incharge must inspect all merchandise deliveries as follows:
1.That the weight and / or quantity of each item agrees with that invoiced
2. That the invoiced price and quantity agree with the quantity ordered and
price quoted is as shown on the purchase order
3. Where within the scope of his responsibilities, verify that all merchandise
received conforms to the established purchase specifications for the hotel
as to size, quality, count, weight etc. bringing any deficiencies or
questionable items to the attention of the user dept. head / purchase
manager
4. Wherever necessary, especially in food and engineering supplies delivery,

he must ensure inspection and approval by the user department head or his
authorized representative
C ) RECEIVING RECORD
1. All food and beverage items received with or without an invoice are to
be recorded on the daily receiving report showing the date, vendor,
invoice number and, wherever possible amount
2. All other merchandise received is also to be recorded wither on a
“goods received note” or “Daily receiving report” as appropriate
3. Copies of receiving returns must be circulated to the general manager,
user department, storeroom, F&B controller, accounting dept. as
appropriate.
D ) ACKNOWLEDGEMENT OR ACCEPTANCE
1. The receiving Incharge will acknowledge receipt or goods from

suppliers by any of the following methods:
- Signing, stamping and returning delivery challan copies
- Signing, stamping and returning invoices copies
- Wherever possible giving reference to the GRR or DRR
number
2. Such acknowledgement of receipt / acceptance of merchandise should

clearly specify
a. Fully accepted
b. Accepted subject to verification
c. Accepted subject to inspection and approval
d. Condition of receipt i.e. if broken / damaged
E ) ONWARD TRANSMISSION OF MERCHANDISE
1. The receiving Incharge will further ensure / arrange for delivery of all
merchandise to either user depts.. such as production areas in case of
direct issued for immediate use, or the storeroom to be stored and
issued at a later date against requisitions
2. The receiving Incharge will further obtain signatures of a responsible
employee so authorized from the user depts../storeroom to evidence
due receipt of all items as recorded. This signature will be obtained
on the accounting dept. /receiving dept. copies of the goods received
note or daily receiving report.
PROCEDURE FOR TESTING OF MILK
Every day the milk is received by the hotel in the receiving, which is to be
tested for its fat content. On the basis of fat content present the milk can be
classified into following categories:
Std. Milk - Fat content 4%

Cows milk - Fat content 4.5%
Buffalo’s milk - Fat content 6%
The test carried out for testing the fat content of the milk is as follows:
1. first about 15 ml sample of each category of milk is taken and mixed

with sulphuric acid and amyl alcohol solution
2. The mixture is then shaken well in the rotator for about 2 to 3 minutes
3. Then the level of milk fat is checked which floats on the top with the
scale
REACTION
As the milk is basic in nature the sulphuric acid neutralizes it and the fat is
precipitated. Amyl alcohol helps to clarify the fat samples. Due to the
rotating motion the fat, which is lighter in nature, gets separated from the
main mixture and then is measured on the calibrated side.
PROCEDURE TO BE FOLLOWED IN RECEIVING
1. PERISHABLES
All food items to be received as per specification, only in case of

perishables, there should be two specifications for seasonal and off-
seasonal items. Specifications should strictly be adhere to – in case of
vegetables, at 10% random sampling to be done to check for quality.
Vegetables being brought in numbers should be checked for their weight,
e.g. celery.
2. NON-PERISHABLES
In case of non-perishables, the goods should be checked for the quality

approved and the agmark approval as applicable
3. LIQUOR
All liquor bottles should be opened and checked for sedimentation or

impurities in the bottle. Bottles should also be checked for their sealing.
Bottles with impurities and loose seals should not be accepted.
4. ENGINEERING
All the above items should have the approval of the chief engineer. Items
shall then be received as per the approved sample and dispatched to the
respective store.
5. GENERAL
All the items besides the above-mentioned fall under this category. All items
should be accepted only after they have been cross checked with the
approved sample or their approval is sort from the concerned department
BLIND RECEIVING
There are certain items that are received blind i.e. which are sent directly to
stores. The stores department maintains a BRR (blind receiving report) in
which the quantity of the item received is noted down. This report is further
sent to the food & beverage control dept.
PRECAUTIONS IN HANDLING FOOD INSPECTION & SAMPLING

UNDER THE PFA ACT 1954
1. Only sealed, unopened items are to be kept in food stores
2. All items in the food stores are to be purchased under a valid receipt-
indicating name of the supplier and or manufacturer, name of the item,
date of manufacture, batch/code number and guarantee statement as in
the Act.
3. It is of utmost importance that every item in the food stores should be

identified with a valid purchasing receipt (as defined in “2” that can
clearly establish the supplier in a court of law, in case of sample lifted is
found adulterated so that the supplier is held responsible.
4. In case of items having an expiry date, the storekeeper must ensure that
no such items are kept beyond their expiry dates, as the supplier’s
responsibility ceases and the hotel will be held guilty if the sample is
lifted.
5. Proper signage should be kept in receiving stores and kitchens.

6. In case the food inspection authorities come to lift a sample and offer to
make payments for the sample lifted, we should not accept any payment
or price on the ground that we do not sell things in the store and the
kitchens. As such we should mention so on the documents if we are
forced to sign.
7. In case the sample lifted is found adulterated, the best lea of defense is
under section 19 of the Act, 1. source of purchase (seller must be
licensed) 2. sample lifted remained in the same condition as it was
purchased i.e. sample was sealed, unopened(unused) and showed no
signs of deterioration like loss of color, texture or bad odour and 3. the
fact that we could not have known or been aware of adulteration without
opening the package. All these points 1. to 3. are to be established in the
court.
8. In case a sample is lifted from an opened container (to be avoided at all

costs) refer point 1. a sealed container of the sample must also be
submitted along with it.
(Contd…)
PRECAUTIONS IN HANDLING FOOD INSPECTION & SAMPLING

UNDER THE PFA ACT 1954
9. Under PFA rules, standards are laid for a number of items to which
they must confirm For items not covered under this rule, claims
made on the label are liable for checking
10. In case of milk sample being lifted, it should be written on relevant
papers (of food inspector) as milk mixture & not Milk. The reason
being, milk has a standard under PFA rules whereas “milk
mixture” does not.
11. It is rather difficult to find suppliers giving warranty for essential
items such as cereals, flour, suji, maida, pulses and even if a
warranty is obtained in
Marking and Tagging:
Marking and tagging puts invoice information directly on the items. For
example, making case goods or bottles of liquor with the delivery dates and
price makes it easier to judge whether stock rotation plans are effective.
Also, when valuing inventory, cost data can be taken directly from cases or
bottles; this saves the time it would take to look up for information on the
daily receiving report. Recording unit price on the product makes it more
likely that the operation staff member will think about them as alternative
forms of cash. Therefore, they will be more careful in handling, portioning
and controlling waste.
 Tagging is often used with meats and seafood and is done when the
products are received.
 In order to complete the tags the receiving employee has to weigh the
product.
 Calculating food cost is easier since the information about the cost on
the tag can be entered on the requisition form when the product is
issued. Also, recording the cost on the tag forces food service
employees to think about product as money which should not be
wasted.
 Theft and pilferage may be better controlled since the tag no0. helps
to identify the product that should be in storage.
 Inventory procedure is simplified since needed information are noted
on the tags. The physical inventory process is speedier.
 Stock rotation can be maintained more easily. This is the goal of FIFO
inventory system.
Reports Generated:
DRR (Daily Receiving report):
All the goods received during the day are noted down
Four copies of this report are made and sent to the following departments
1. Purchase
2. Food and Beverage Controls (along with original daily requisition
sheet)
3. Finance (along with bill)
4. With receiving itself
GRR (Goods Receiving Returns):
When the hotel receives the goods, the hotel feeds into the quantities. The
receiving supervisor is responsible for this job. In case of general
commodities a written format is prepared which is called Goods Receiving
Return
Four copies of this reports are made and sent to the following departments:
1. Purchase
2. Finance (Along with the bill)
3. General Stores
4. With Receiving itself
Inspection Report:
Four copies made for all items received from outside Delhi. Sent to the
following department:
1. Purchase
2. Central with GRR
3. User Department
Short Supply Report:

Three copies are made and sent to
1. Purchase (for follow up with suppliers)
2. Chef’s office for Perishables or concerned department
Gate Pass update report:

Three copies are made for the following department:
1. Security
2. Concerned Department
Security Concerns In Receiving
Examples of suppliers theft possibilities when the products are received

include the following:
1. The supplier may deliver lesser quality items, such as inexpensive

domestic wine instead of higher quality wines or ground beef with
more fat and the operation pays the price for the higher quality.
2. Short weight or short count products may be delivered so the food
service operation pays for more products than it receives.
3. Thawed products may be represented as fresh. While operation
pays higher price for fresh.
4. Ice may be ground into ground meat products , filler such as Soya
products or non fat dry milk may be added , and meat may be sold
with excess trim. Weight of ice and /or packaging may be included
in the product weight on which price is based.
5. “ Slacked Out” Seafood – frozen fish, thawed and packed in ice,
may be sold as fresh.
6. Expansive steaks and inexpensive meats may be combined in one
container and when the entire container I weighed the operation
may be billed for more expansive steaks than are actually in the
container.
7. One empty liquor bottle may be included in a case of 12 bottles.
Precaution in Receiving:
1. Have different people receive and purchase
2. Train the employee to receive properly.
3. Receiving is too important to leave to whoever happens to be

handy.
4. To the maximum extent possible schedule product deliveries at

slow times so the receiving personnel who may have other duties
have time to receive it correctly.
5. Have delivery made to specified area of the facility and be sure

receiving scales and other equipment are available and are used.
6. After receipt, immediately move the products to the storage.
Chances for employee theft increase the longer products remains
unattended.
7. Do not permit sales person or delivery / rout person access to back

of the house production or storage areas. The receiving areas
should be closed to an outside exit and visible to management
personnel.
8. Lock the outside, door install an audio signal so delivery persons

can ring when they arrive. With this plan receiving personnel have
delivery persons in sight during their entire visit.
Inventory Management
The center core of Material management is inventory control.It is always

management prudence to hold the inventory level as low as possible .
The level at which any item is to hold is difficult to determine with the two
dangers of either overstocking or items running short of supply.
Dictionary defines inventory as list or schedule of items or articles

comprised in an estate. More commonly it means stock of goods.
Inventory may be classified in four major categories. They are:

1. Production inventory
2. Maintenance, repair and operating requirement inventory
3. In process inventory
Finished goods inventory
Features of a good inventory Management are:
 Fixing of Maximum /Minimum level

 Determining the size of the inventory
 Deciding about the issue policy
 Determining the EOQ
 Proper storage facility
 Keeping check on Obsolescence
Stock Level Determinants:
Buffer Stock: Also called safety stock , is the minimum stock that will
always be maintained.
Working stock: It is the stock in use that will rise and fall with each batch
received and issued.
Re order level:
It is the level that the stock in hand has reached when it is necessary to make
a future order so as to prevent running out of stock. This level would be set
in advance for each item and has to be enough to cover any normal future
demand.
ROL = PL+ B
P= Future demand of item/ period

L= Lead Time
B= Buffer stock
Inventory Turnover:
One important function of keeping accurate inventory record is to allow

managers to assess how much money is being invested in non- productive
inventory. Value of goods in inventory is typically calculated on a monthly
basis to provide information for monthly accounting system. Non-productive
inventory refers to the items that are not accounted for in the financial
accounting period. In order to find out how much money is tied up in non-
productive inventory, managers measure the inventory turnover rate.
Inventory turnover rate refer to number of times raw material is converted
into revenue. In financial terms it refers to number of times food and
beverage products become cost to generate revenue.
Inventory Turnover = Cost of Food

------------------------------------------------------------
Average Inventory Value
(Average of opening and closing Balance)
Techniques of Inventory Management:
1. Economic order quantity

2. ABC Analysis
3. Demand Forecasting
Economic order Quantity:
EOQ refers to the size of the order, which gives maximum economy in the
purchasing any item of raw material, or finished goods.
It is fixed mainly after taking into account the following costs:
1) Ordering cost
2) Inventory carrying cost.
Inventory carrying cost is the cost of keeping the goods in the stock. And
would include the interest on investment, Obsolescence losses, store keeping
cost, insurance premium. Larger the inventory the more will be carrying
cost.It is also referred to as holding cost.
EOQ = V2nc/ci
N= Annual requirement in units
S = Cost of placing order in Rupees
C= Carrying cost per annum in percentage
I= Unit cost in Rupees
Assumptions Of the EOQ Model:
1. The firm knows with certainty the annual usage or demand of a

particular item
2. The rate of consumption of raw material and sale of finished
product is constant through out the year.
3. The orders for replenishment are placed exactly when inventories
reach zero level.
ABC Analysis
ABC analysis is the technique of exercising selective control over the

inventory item. The technique is based on an assumption that the firm should
not exercise same kind of control over all the items
It should control rather those items that are more costly
The analysis concentrates on the important items and therefore is also known
as control by importance and exception. It is also known as proportional
value analysis, since the items are classified in importance of their relative
value.
The control is exercised through the total number of variety of material
according to their value
A stands for the items of high value of items. It can be 10% of the total
inventory, which forms 60% of the value of the total inventory.
B stands for the items of average movement and constitutes quite a good %
of the total inventory.
C stands for the items of low value but in absence of which work suffers.
Demand Forecasting
The overall approach used by MRP is as follows:
 Obtain forecast of the demand for the final product.

 Breakdown the final customer requirement into gross requirement
 Compare the gross requirement with the available inventory to produce
the net requirement
 Thus schedule the provision of the net requirement to suit customer
requirement based on available capacity
Store:
Basic objective of the store is to maintain an adequate supply of the items

for the immediate needs of the business with a very minimum loss through
spoilage and pilferage.
Storage space should be planned with the utmost economy of the space. This
means that any item in the store can be withdrawn without any difficulty.
Stores should be located near receiving area and should be constructed of
such material that they can be cleaned easily, well lit, well ventilated and
well secured. There should be ail marking between rows, bins and stacks.
The layout of the all the department should be such that the natural flow of
the material is not disturbed. All the materials must be suitably examined so
that only the good ones can reach stores.
Reduction in storage space and reduced handling cost ensures maximum
returns on investment.
Following points must be considered for effective storage system:
Where to Store?
a) Following factors govern the layout :

 Similarity
 Popularity
 Size
 Characteristics
 Turnover
 Capacity
Pricing of Issues:
The department, their issues must be a system established so the department

can be fairly charged for what it has requisitioned for its use.
Perishable
In case of perishables, they frequently go directly to the kitchen as direct
issues and are priced against the actual purchase price of the commodities.
Non-Perishables:
In the case of non-perishables one of the following methods can be

followed:
1. Actual purchase price
This is applied to the items which are in frequently purchased and of
which only a small stock is held, and also for slow moving items. Issues
are priced at its actual price.
2. Simple average price
This may be applied to the items, which have a fluctuating market price.
When a new purchase is made, a new average price should be calculated
3. Weighted Average Price:
This is more accurate method that is sometimes used. The quantities
are taken into account as well as the price and thus a more accurate actual
price is obtained.
4. Last in first out:

This is also applicable to the items having a very high fluctuating market
price. This is when issues will be made with the normal relation of the
stock but priced out at the latest purchase price on the items.
5. First in first Out:
This is also applied to items, which have a fluctuating market price. Issues
will be from earlier purchases, priced accordingly.
6. Inflated Price:
Here the goods are issued at cost price say 10% or 15% to recover the
transportation and storage charges.
7. Standard Price:
This is also used when the market price of the commodity fluctuates
frequently. A standard price is decided on for a given period of time usually
for 3 or 6 month and positive and negative variance recorded when
purchases vary in prices from the standards.
This method of pricing will assist in measuring the performance of the
kitchen cost price. The setting of standard price for the next trading period is
based on the present standard price and the anticipated price trend.
Inventory Control
When designing control system one must attempt that every procedure s cost
effective. It is generally not possible for management to exercise control
over the entire product but the most expansive. This definition of expansive
product will differ from unit to unit as every unit is different and manager
must develop control measure that recognizes the operation’s unique
situation.
ABC analysis
One approach that has been used is based on ABC analysis inventory
classification system. Which categorizes products according to their
perishability and cost per serving. Category A can be those items that are
high in perishability and cost per serving. B is the product that is low in
perishability and high in cost.
Physical Inventory System:
It is used to periodically asses the value of food and Beverage procusts in the
inventory. This is done atleast monthly to generate information required for
the income statement and balance sheet.
Bin Card:
It is generally advisable to use bin card for the main purpose of disclosing at
a glance what quantity of the particular item/commodity is in store without
checking the ledger . The saving in time is readily apparent in the items
which take a lot of time in counting, weighing and opening containers to
ascertain the accurate quantity of the commodity.
Sample of a Bin Card
Description of article Bin Card Normal Order

Maximum
Code No. Bin No. Re order level
Minimum
Receipt Issue Balance Remark

Date G R No. Quantity Date Requisiti Quantity Quantity Goods
on No. on order
and audit
note
A bin card should be in operation for every commodity and the best place for
the card is in the same rack, shelve, container etc. in which the goods are to
be found.
As the balance shown by the card should agree with the actual quantity in
the store , all the columns must be filled up as and when the transactions
take place other wise the purpose of this system is defeated.
Standard Procedure for Beverage Control:
Beverage control is exercised mainly from two places:

 Store Room Control
 Bar Inventory Control
Store Room Control:

1. Purchase Procedure; A formal purchase indent raised by the beverage
storeroom is to be utilized for all beverages purchased. This is to be
approved by F&B Manager in advance.
2. Receiving: All the beverages are to be received by receiving and then
delivered to beverage store. No direct issues are made in any form of
beverages.
3. Use of Requisition: A proper beverage requisition form duly filled is
must.
4. All store room receipts as per daily receiving report and all store issues as
per requisitions will be posted in a Kardex maintained by the store
department.
F&B Controls
“Maybe defined as the guidance and regulation of the

operating and the catering policies of the Hotel or any
catering establishment.”
Limitation:
1. Control systems mainly depends on the policies and
operational procedures
2. It requires constant management supervision
3. It also needs management actions to evaluate the
information and act upon it.
Objectives:
1. Analysis of Income and expenditure.

2. Establishment and maintenance of standards
3. Pricing
4. Prevention of waste
5. Prevention of fraud
6. Management information
Problems
1. Perishbality of produce
2. Unpredictability of volume of business
3. Unpredictability of menu mix
4. Short cycle of catering operation
5. Departmentalization
FOOD COST:
What is cost?
• Costs are expenses that are incurred when goods (food and beverages)
and/or services are provided.
Types of cost
• Actual cost: is a cost that has actually occurred through the operations
of the establishment, such as payroll and food and beverage costs. It is
not to be confused with what the cost should be.
Budgeted cost:
• Is a forecast cost, which may or may not be met. If the sales fore cast
was too low and the cost was based on the projected sales, the
budgeted cost will be high in monetary units or vice versa. It is
established at the outset of a project. This is a pre-determined amount.
Controllable cost
• Is a cost that can be effectively controlled by someone with authority.
• Certain costs like heat, light and power and water costs are
controllable.
• All controllable costs are variable costs.
Fixed cost
• Those cost which remain constant irrespective of the product or
service output, within and up to the capacity that has been built up.
• Committed fixed costs: are costs like depreciation, salaries etc.
• Discretionary fixed costs: are costs like research, which may or may
not be incurred.
Sunk costs
• Is a cost that has been incurred in the past and cannot be reversed.
• These are basically costs of items of the nature of capital expenditure.
• Sunk costs are therefore money spent on purchase of such fixed
assets.
Opportunity cost
• Is a cost that occurs when a certain action is not taken to increase
sales.
• In other words a profit foregone is an opportunity cost.
FOOD CONTROLS
Food cost: this refers to the cost of food incurred in preparing the meals
served. When standard food costs are known a food and beverage operation
is able to compare the cost of food with the sales income it generates. One
way to express cost per day, or a month or a year is to state the cost in
absolute terms.
Food cost percentage: another important way to measure food cost is

food cost percentage. This expresses cost as a percentage of sales income
and is calculated by dividing food costs by food sales and multiplying by
100.
Potential food cost (or sales) the food cost (or sales) under perfect
conditions. This way expressed as a percentage or in financial terms.
The procedure to calculate food cost percentage begins by first

establishing all standard cost tools: standard purchase specifications,
standard recipes, standard yields, standard portion sizes and standard
portion costs.
FOOD CONTROLS
The main objectives of food cost control are :

 The analysis of income and expenditure.
 Establishment and maintenance of standards.
 The pricing and quotations of menus.
 Prevention of waste.
 Prevention of fraud.
 Information for management reports.
Standard cost tools:
1. Production planning
2. Standard purchase specifications,
3. Standard recipes,
4. Standard yields,
5. Standard portion sizes and
6. Standard portion costs.
7. Calculating Menu selling Prices
Production Planning
Production planning is the first step towards planning and

ensuring the effective guest satisfaction as well as maintaining
effective proper control over the cost. Personnel assigned in the
above areas are responsible for the total guest satisfaction but if
the costs are not handled then the total purpose of the business
is defeated.
Production planning is simply getting ready for production.
Operations of all sizes must prepare for production, as all the
recourses must be available when they are needed the most.
Unplanned operations lead to over or under production of
resources. While planning does not ensure elimination of all the
problems, but it certainly ensures elimination of serious
marketing and economical consequences.
Food and beverage operation must develop specific procedure

for production planning that is suited to its own needs.
However, a typical strategy is to first forecast production
forecast requirement and then translate those requirement into
production planning.
Forecasting production requirements – Sales History:
Sales history can be used to identify trends of consumption. This helps in

understanding of actual quantity of production of food and beverage for a
particular function, day or a season. If this activity is not followed
carefully then the entire activity may result in a loss making venture due
to excessive leftovers.
A careful analysis of previous sales can help control production quantity.
Seasonality of business, weather conditions, special events, community
and national events, etc affect business and its production planning.
Consumption patterns of each type of banquet should also be studied
carefully and the history maintained so as to plan these production level
well in future.
A separate sales history of each day can also be maintained so that a
reasonable trend can be established, which will be for future planning.
The production planning will also depends on the following parameters:

 Occupancy forecast
 Outlet cover forecast
 Banquet sale forecast
 Menu sale summary or popularity statement
Production and service control:
The guest satisfaction depends greatly on production and service

planning that is why these control mechanisms become very complex.
If it important for the management to be cost effective it is also important
for the management to give value for money to the guest so as to sustain
the business.
Production must ensure quality while complying with cost limitations. In
food production and servings , the task of managing and controlling are
hard to separate from supervising as both these activities are labor
intensive.
STANDARD YIELD
The term “yield” maybe defined as the edible or usable part of the food
item that is available after preparation or preparation after cooking.
Therefore” standard yield” maybe defined as the yield obtainable when
the item has been processed in the particular standard methods of
preparation, cooking and portioning, the items firstly being purchased to
a known standard.
STANDARD YIELDS
 Establish a standard for the quantity and number of portions
obtainable from a specific item of food
 Establish a standard for comparison with operating results of the

production department
 Help evaluate standard purchase specifications
 Assist in menu costing and pricing
 Assist in converting forecast requirements into raw material

requirements
 The term yield means the net weight or volume of a food item after it
has been processed and made ready for sale to the guest.
 The difference between the raw or “as purchased “ (ap) weight and the
prepared or “edible portion”(ep) weight is termed as production loss.
 In general, there are three steps in the production process. The first
step is preparation, which includes such activities as meat trimming
and vegetable cleaning.
 The second step is cooking.
 Holding, the third step includes the portioning of those products that
have not been pre-portioned. A “loss” can occur in any of these steps.
A standard yield results when an item is produced according to

established standard production procedures outlined in the standard
recipe.
They serve as a base against which to compare actual yields. For

example if the standard purchase specifications are adhered to and a
meat item is properly trimmed, cooked and portioned, the actual yield
should closely approximate the standard yield.
DETERMINING STANDARD YIELD

 Standard yields are determined by conducting a yield test.

 As a general rule, everything that does not have a 100%yield should be
tested. (Examples of items with 100% yield are some portion-
controlled products such as meats and those convenience foods that
only need to be plated).
 However, from a practical standpoint, yield tests are typically
performed only on high cost items or on lower cost products used in
large quantities.
 The yield from a product depends upon several factors, including the
grade, brand and original weight of the item.
 Therefore, it may be valuable for a food and beverage purchaser to
compare the yields for similar products from different suppliers.
 It maybe possible to substitute a raw product with a lower cost per high
unit that provides a yield similar to that of a higher cost product,
without comprising the operation’s quality standards.
Example
 An example of the results of a yield test is shown. In this example, eight
oven prepared beef ribs, averaging 20 pounds, 4 ounces each, were
cooked, trimmed and the bones removed according to a property’s
standard recipe and production procedures. (Note that eight ribs were
used in this example to provide a more accurate base for the yield
calculations).
 By weighing the meat at each step, the loss due to cooking and trimming
can be assessed.
 Since the AP weight is already known, the meat must next be weighed
when it is removed from the oven after cooking.
 By subtracting the cooked weight from the original weight, you can
determine the loss in cooking- in this example, an average of 3 pounds,
14 ounces per beef rib.
 Next the fat cap and bones must be removed, and the remaining meat
weighed.
 This is the servable weight – in this example, an average of 11 pounds, 3
ounces per beef rib.
 Subtracting the servable weight from the cooked weight indicates that
the loss in carving and bones averaged 5 pounds, 3 ounces.
SUMMARY OF YIELD TEST RESULTS:
ITEM: OVEN PREPARED BEEF RIB GRADE:

USDA CHOICE
PIECES: 8 AVERAGE
WEIGHT: 20LB, 4OZ
COOKING WEIGHT %OF COST PER COST

AND ORIGINAL SERVABLE FACTOR
PORTIONING WEIGHT LB
DETAILS
SERVABLE 11LB 55.25%
WEIGHT
LOSS DUE 5LB 25.62%
TO FAT TRIM
AND BONES
LOSS DUE 3LB 19.13%
TO
COOKING
20LB 100%
OTHER DATA: COOKED AT 300DEG FAHREHEIT FOR 4 HOURS , 45
MIN
ADJUSTING STANDARD RECIPE YIELDS:
The yield from a standard recipe can be easily increased or decreased by

using an adjustment factor. An adjustment factor is found by dividing the
desired yield by the original yield. For example, if a recipe yields 100
portions and you want 225 portions of the same size, the adjustment factor
would:
DESIRED YIELD = ADJUSTMENT FACTOR

ORIGINAL YIELD
225 PORTIONS = 2.25

100 PORTIONS
Each recipe ingredient is then multiplied by then adjustment factor to

determine the amount needed for the desired yield . For example , if the
original recipe required 8 ounces of sugar, the adjusted quantity would be
ORIGINAL AMOUNT *ADJUSTMENT FACTOR = NEW AMOUNT
8 OZ * 2.25 = 18 OZ
Required if the portion size is altered . For example if a recipe yields 40

three quarter pound servings and you want 40 one half pound a similar
procedure can be used to determine the new amount servings, the adjustment
factor would be:
DESIRED AMOUNT = ADJUSTMENT FACTOR

ORIGINAL AMOUNT
½ LB = .67
¾ LB
Each recipe ingredient must then be multiplied by this factor to determine
the amount of the ingredient required for the recipe. For example , if a recipe
required for the recipe. For example if a recipe required 30 pounds of ground
beef to yield 40 one half pound servings you would need approximately 20
pounds of ground beef.
ORIGINAL AMOUNT *ADJUSTMENT FACTOR+NEW AMOUNT
30 LB * .67 = 20.1 LB
COOKING YIELD TEST CARD
COMMODITY OVEN WT WT % WT %
TEMP BEFORE AFTER LOSS SAVING
COOKING COOKING USING
FOIL
CHICKEN
CONV. 375 3LB 2OZ 2LB 3OZ 30 -
FOIL DEG C 3LB 2OZ 2LB 10 OZ 16 14
375
DEG C
TURKEY
CONV. 375 15 LB 8OZ 10LB6OZ 33 -
FOIL DEG F 15 LB 8OZ 12LB 2 OZ 22 11
375
DEG F
LEG OF
MUTTON
CONV 350 5LB 5 OZ 3LB 10 OZ 31.75 -
FOIL DEG F 5 LB 8 OZ 4 LB 41/2 22.5 9.25
350 OZ
DEG F
RAW YIELD TEST RECORD
ITEM: DATE:
NO:
TTL WEIGHT:
TTL COST:
PRICE PER KG:
BREAKDOWN WT % OF VALUE TTL COST REMARKS

TTL /KG VALUE PER
WT KG
STANDARD PORTION
A standard portion size represents the number of ounces of food item to be
served to the customer in relation to the food cost and the selling price of the
item
TWO PORTION ARE AVAILABLE

a. ALA CARTE
b. TABLE D’HOTE
STANDARD PORTION SIZES
I. PROVIDE STANDARDIZED VALUE FOR THE
CUSTOMER’S MONEY
II. ELIMINATE THE POSSIBILITY OF FLUCTUATION
IN DISH SIZE AND THEREFORE IN PROFIT/COST
III. ARE A USEFUL TOOL FOR DEVELOPING
STANDARD FOOD AND BEVERAGE COSTING
STANDARD PORTION SIZES
Each food and beverage standard recipe indicates a standard portion size.
This is the fourth standard cost tool for ensuring consistency in operation.
Because a given menu item or drink will be the same size each time it is
portioned, no guest will get a larger or smaller portion or a stronger or
weaker drink. the benefit is twofold: portion costs for the same food and
beverage items will be consistent, and the guest will always receive the same
value.
Value is the relationship between price and quality. Bashing the selling price
of the food or beverage item, at least in part, upon its cost will help to
establish a fair selling price, or value, from the guest’s perspective. Assume
that an operation does not provide a standard portion size. on one occasion, a
guest may receive a very large portion – a great value. Returning at a later
time, the same guest may receive a smaller portion at the same selling price
–a lesser value and a disappointment for the guest. Consistency, then in
terms of value perceived by the guest, is a primary advantage of the standard
portion size.
Portion control tools must be available and used every time a recipe cost
average
is prepared. portion control tools include such items as weighing and
measuring equipment, ladles and scoops to portion food, jiggers and shot
glasses for beverage , or automated beverage dispensing equipment.
STANDARD PORTION COSTS
Exhibit 3.3 Sample standard portion size sheet

ITEMS Portion Size Porduct Other data Work station
Form Responsible
APPETIERS 5ea AP 21-25 count
Shrimp cocktail
Fruit Cup 5oz EP See recipe
Marinated 21/2oz AP
Herring
Half Grape 1/2ea AP 27 count
Fruit
Soup,cup 6oz EP 6 ¾ oz cup

ENTREES 14oz AP AP –bone in
Sirloin steak
Prime Rib of 9oz EP
Beef
Lobster 11/2lb AP
Ragout of 4oz EP
Lamb
Chicken 1/2ea AP 2 lb Average
VEGETABLES 3oz EP
AND SALADS
Whipped
Potatoes
Baked Potatoes 1ea AP 90 count
Asparagus 3ea AP Jumbo
spears spears
Half tomato 1/2ea AP 4*5’s
Garden Salad 21/2oz EP
Hearts of 1/4head EP 5’s
lettuce
AP-As purchased ;EP-Edible portion
After standard recipes and standard portion sizes have been developed, a
standard portion cost –the fifth standard cost tool- can be calculated. A
standard portion cost is simply, the cost of preparing and serving one portion
of food or one drink item according to t7he standard recipe.
A standard portion cost is determined by diving the sum of the recipe yields.
For example, if the cost to prepare a recipe if the cost to prepare a recipe is
$75.00 and it yields 50 portions, then the standard portion cost for that item
is $ 1.50($75 .00/50 portions). The prices for ingredients listed in standard
can be obtained from current invoices.
Exhibit 3.5 presents a sample worksheet that can be used to calculate the
standard portion cost for a food item. Note that each recipe ingredient is
listed in column 1 and the amount of each ingredient is recorded in column
2. It is impractical to cost some ingredient specially a small amount of an
inexpensive item . For example, no cost are included for salt and pepper. (the
symbol “tt” means “to taste”). The cost per purchase unit is recorded in
column 3.
To arrive at the total cost of each ingredient (column 4), the amount of
ingredient (column 2) is multiplied by the cost per unit (column 3). For
example, the total cost of fish fillets is calculated as follows :
AMOUNT * COST /UNIT = TOTAL COST

22.5 LB * $ 2.85 = $ 64.43(ROUNDED)
THE TOTAL INGREDIENTS COST FOR THE RECIPE IS INDICATED
AT THE BOTTOM OF COLUMN 4.THE TOTAL INGREDIENTS COST
FOR PREPARING 60 PORTIONS OF FISH FILLETS
STANDARD RECIPES
May be defined as a written formula for producing a food item of a specified
quality and quantity for use in particular establishment. It should show the
precise quantities of the ingredients together with the sequence of
preparation and service of the item .
OBJECTIVE OF STANDARD RECIPE
1. To pre-determine the quantities and quantity of the ingredients
2. To pre determine the yield obtainable from a recipe
3. To pre determine the food cost per portion
4. To pre determine the nutritional value of the dish
5. To facilitate menu planning
6. To facilitate purchasing and internal requisitioning
7. To facilitate food preparation and portion control
STANDARD RECIPES
1. Are required for measuring the cost of a menu item

2. Are required for standardized portion control
3. Help in developing a scientific pricing structure
4. Are required for production planning
5. Help in standardizing production quality
There are several other reasons to use standard recipes in addition to

the advantages of consistency in appearance, cost, and taste:
 When managers know that the standard recipe will yield a specific
number of standard size portions, it is less likely that too many or too few
items will be prepared.
 Since standard recipes indicate needed equipment and required
production times, managers can more effectively schedule food
production employees and necessary equipment. Less supervision is
required since standard recipes tell the employees the quantity and
preparation method for each item. Guest work is eliminated; employees
need only follow recipe produces. Of course managers should routinely
evaluate the work of items produced and ensure that standard recipes are
followed correctly.
 If the chef is ill or the bartender doesn’t show up, a product can be
produced if the standard recipe is available. Granted, in experienced will
be slow and make mistakes
However if, the recipe is in the head of an absent employee instead of an

standard recipe card management will be in an even more awkward position.
Using the standard recipe does not require that the recipe be physically in the
work area during the production times. After a cook prepares a menu item
several times, or a bar tender mixes a drink several times, he /she will
remember ingredients, quantities, and procedures. It would be obliviously
not practical before preparing a drink a busy bartender has to remember
standard recipes. Standard recipe must be always be followed and must
always be available but it doesn’t always need to be read.
List all ingredients in the order they are used
 Decide whether to use weights or measure or both. Weighing is

always more precise than measuring and it is just as practical to
weigh liquids, flour etc as it is to measure them. Avoid
confusion by using consistent abbreviation through put all the
standard recipes you are developing
 When ever possible, express all quantities in amounts that are
practical for those preparing the item. For eg. Convert all
measures into the largest possible units. Change 4/8 cup to ½
cup, 4 cups to 1 quart or 3 teaspoons to 1 tablespoon. At this
point you need to be sure that the proper equipment is available.
It does little good to specify a 3 ounce quantity when an
accurate measuring scale is not available. Also, when applicable
recipes should be developed that call for standard size pans and
other equipments.
 Records, procedures and details, concise and exact term avoid
ambiguous statements. For eg. What does “1 cup whipping
cream” mean ? Does it mean 1 cup of cream which has been
whipped or does it mean 1 cup of cream which must be
whipped. When mixing is called for, tell how to mix (by hand
or by machine) and provide the exact time and speed if a
machine is used. State the size and type of equipment needed
and always list the exact temperatures, cooking times and other
necessary controls.
 Provide directions for portioning. Indicate the type and size of
the serving dish. Also, indicate portioning equipment such as
ladle or scoop and specify the expected number and size of
portions. If garnishes or sauces are needed, these should be
listed.
After the standard recipes have been recorded, share them with other
production staff. Solicit their ideas about accuracy and possible refinement.
Finally, test the recipe s to be certain that they have yield product of desired
quantity and quality. After successful testing, the recipe may be considered
standardized.
Despite the advantages of using standard recipes, their may be some
difficulties encountered in implemented them. Cooks or bar tenders e.g.,
may feel that they can no longer be creative in kitchen or behind the bar.
They may re send the needs to put things down on papers. Other difficulties
may be related to concerns about time. It takes time to standardized existing
recipes, and it takes to train production employees.
These concerns, however, are minor when compared to the points already
noted in favour of using standard recipes. In addition, managers can
minimize difficulties with implementing standard recipes. In addition,
managers can minimize difficulties with implementing standard recipe by
explaining to employees why standard recipes are necessary. And by
involving them in developing the recipes.
STANDARD RECIPE
Exhbit 3.1 sample standard Food Recipe
Fish fillet amandine IX.Main dishes-

Fish 2
Baking Temp :450 F
Baking Time:14-15
min
Yield: ______ Yield:60

Size: _______ size:6 oz
Amount Ingredients Amount Procedure

---------- Fish fillets, fresh or 22 1/2lb 1.Defrost fillets if frozen fish is
frozen 6 oz portion used.
2.Arrange defrosted or fresh fillets
in single layers on greased sheet
pans
---------- Almonds, toasted, 1 lb 3.to toast almonds

chopped or silvered a: spread on sheet pans
b:Place in 350d F,oven until lightly
toasted
App Time :15 min
---------- Margarine or butter, 2 lb 8 4.Add almonds,lemon juice,lemon
softened oz rind,salt and pepper to softened
margarine or butter.
Lemon juice pp 5.Mix thoroughly
Lemon Peel ½ cup 6.spread margarine mixture on the
Salt 2 ¾ oz fillets as uniformly as possible
4 tbsp Amount per fillet #60 scoop
Pepper,white 7.Bake at 450 d F for approx 1 min
Weight:margarine- 1tbsp or until fish flakes when tested with
almond mixture 4 lb fork
8.Sprinkle lightly with chopped
parsley when served.
The standard recipe is a formula or producing a food or beverage item. It

provides a summary of ingredients, the required quantity of each, specific
preparation procedures, portion size and portioning equipment, garnish, any
other information necessary to prepare the item. The advantages of standard
recipe are equally relevant in both food and beverage preparation. The
primary advantage of following a standard recipe is that, regardless of who
prepares the item, when it is prepared, or to whom it is served, the product
will always look, cost and taste the same. The consistency in operations
provided by the standard recipe is at the heart of all control and many
marketing, systems.
Exhibit 3.1 presents a sample standard food recipe. Note that this recipe
yields 60 portions each with a standard portion of 6 oz. The “amount”
column the left margin can be used to adjust the yield to a larger or smaller
quantity. To aid in portioning, the recipes “procedure” column specifies that
a #60 scoop (which equals 60 leveled scoops , or servings, per quart) should
be used note also that the recipe clearly indicates baking time , temperature ,
and the exact procedure for preparing the menu item
Calculating Menu selling Price:

Pricing methods of Food and Beverage operation must make sure that all the
items on the menu are priced keeping the organizational objectives, policies
and strategies in mind. Cost and value for money must be balanced. There
are several methods of pricing that can be applied for F&B pricing:
 Subjective pricing Method
 Simple mark up Pricing method
 Contribution margin pricing methods
 Ratio pricing Methods
 Simple prime cost methods
 Specific prime cost methods
1. Subjective Pricing Methods:
Subjective pricing methods include:

 Reasonable Price Methods:
The reasonable pricing method will represent value for maoney and the
charges are usually fair and equitable.
 The Highest Pricing Method:
Using this plan the management sets the highest price that a guest is willing
to pay. The concept of value is stretched to the maximum and then backed
off to provide a margin of error in the management ‘s estimate.
 The Loss leader Method:

The management sets a very low price for menu items so that a customer is
attracted to buy the product. The assumption is made that the guest will buy
other things while he is in the restaurant he will buy other products too
which will make profit.
 The intuitive Price methods:
In this method of pricing the management decides the pricing based on the
intuition. This is a very ineffective method of pricing as the price does not
denotes the profit margin or the competition pricing.
2. Simple Mark Up Methods:
The mark up is decided on the cost incurred on the product and to yield the
desired profit. There can be three ways of doing this type of pricing:
 Ingredient Mark Method:
This pricing method attempts to consider all the product cost when pricing
food items, and beverages . There are three ways of doing the same
a) Determine the ingredient cost
b) Determine the multiplier to use in marking up the
ingredient’s cost
c) Establish a base selling price by multiplying the
ingredient ‘s cost by the multiplier to calculate the
final selling price.
 Prime Ingredient Costing
Only the prime ingredient cost is taken into account and pricing is based on
the same.
 Mark up with accompaniment
Contribution Margin Pricing Method:
Revenue Control By F&B Controls:

 KOT/Check System
 Control of checks
 Random matching
 Menu sales summary
 Unauthorized consumption
 Competition information
 Pricing
 Cost benefit analysis
 Banquet controls
 Concept of menu engineering
KOT control:
 KOT/Check System
 Control of checks
 Random matching
 Menu sales summary
 Unauthorized consumption
 Competition information
 Pricing
 Cost benefit analysis
 Banquet controls
 Concept of menu engineering
Random Matching:
 Kitchen KOT copies to be matched with accounts
 Copies of the related checks on random basis for each outlet.
 This is to be carried out by the F&B Controls depts. for checking
income realization
Menu Sales Summery:
 To be made shift wise by restaurant and final daily compilation by

F&B Controls
 Used to determine the popularity/Demand of each item
 Used for menu planning
 Effective menus increase sales, decrease wasteful production and
increase profitability
Unauthorized Consumption:
 By the hotel Employee invites penalty from Mgmt.
 Person involved could be charged price exceeding selling price and/or
warning issued
Competition Intelligence:
 By the hotel Employee invites penalty from Mgmt.
 Person involved could be charged price exceeding selling price and/or

warning issued
Pricing:
 Based on the standard recipe cost
 Work out prices at various material cost percentages
 Compare with competition prices
 Look at avg. menu cost
 Pricing to be worked out by F&B Mgr, UFC and F&B
Controller
 Approved by GM
Menu Pricing Application:
 Return on Capital
 Overall budget
 Overall gross profit %
 Individual department budget
 Ind. Dept GP %
 Ind. Dept. variance in profit Margin
 Special pricing consideration
Cost Benefit Analysis

 For food festivals and special F&B Events
 Works out profitability projection in advance based upon contribution
to fixed cost
 Incase profitability projection positive, proceed with special event
 Work out profitability after the event and compare with projection
Banquet Control:
 For food festivals and special F&B Events
 Works out profitability projection in advance based upon contribution
to fixed cost
 Incase profitability projection positive, proceed with special event
 Work out profitability after the event and compare with projection
Cost Reports Generated Bt F&B Controls:
 Food cost report

 Raw Material Consumption of Imported food items
 Slow/Non-moving food items
 Discrepancy Report for food store
 Composition of Complimentary
 EDM Statement
 Banquet Function Report

 Beverage cost Report
 Mini-bar sales summary
 Consumption of imported and Indian spirits
Special Functions of F&B Controls:
 Food Cost Report

 Beverage Cost Report
 Inventories
 Excise Mgmt
 Imported Item Management
 EDM Checks
 Room amenities
 Monthly F&B Consumptions
 Month end Reconciliation

Material Management

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BONOPHOOL BANERJEE 1

“Material Management can be defined as that

This will include provisioning of material in specified quantity at

Secondary objective will include:

I. Locating new sources of supply.

PHASES OF MATERIAL MANAGEMENT

(A) “PLANNING” PHASE

(A) PLANNING PHASE

(a) Financial policy

(b) Marketing policy

(c) Catering policy

(B) OPERATIONAL PHASE

(C) “MANAGEMENT CONTROL AFTER THE EVENT”

Food & Beverage cost reporting

Purchase can be defined as a Function concerned with the search,

1. Purchased department in a unit is an integral part of the total material

2. Another important aspect of this department is it’s affect on the total

3. This department is run by the minimum number of manpower in the

FACTORS FOR EFFECTIVE PURCHASING

There are four guiding factors for effective purchasing:

1. What a) What do you need?

2. When a) When do you need the food items?

3. Where a) Where will you buy the food items?

4. Why a) Why do you need the item?

Another way of looking at them would be:

A) Past total consumption of the commodity

A) Suppliers- Competition of the commodity

WORK FLOW IN PURCHASE

The following steps lead to a purchase:

1. Genuine need for an item/s by the user department-

1. The Specific Period contract

2. The Quantity contract

Which aims at ensuring continuity of supply of a given quantity of an

1. Mention the period of contract.

1. Daily for perishable goods where freshness counts e.g., vegetable

This is another method of awarding the contract for an item

ADVANTAGES OF FORMAL METHOD OF PURCHASING

DISADVANTAGES OF FORMAL METHOD OF PURCHASING

1. Non-seasonal items generally not supplied.

No formal terms and conditions

a.) OPEN MARKET

1. Setting up for a purchase committee consisting of one member each

b.) CASH AND CARRY

1 Time and manpower consumed makes it impractical

ADVANTAGES OF INFORMAL METHOD OF PURCHASING

1. Competitive pricing even for small volume

DISADVANTAGES OF INFORMAL METHOD OF PURCHASING

1. Extra manpower required because purchasing is done at the

PROCEDURE FOR ANNUAL CONTRACTS

1. Inviting of quotations through and advertisement in the news paper

2. Quotation form along with the purchase specification with general

4. All the quotations received and recorded in a comparative statement,

5. Quotations are further verified by the purchase manager, F&B

THE CLAUSED TO BE INCLUDED IN PURCHASING BY

1. The name of the supplier

FOOD AND BEVERAGE

1. Meat, Poultry and eggs

1. Cereals, pulses and spices

DUTIES OF THE PURCHASE MANAGER

1. Responsibilities for the management of the purchasing office, the

PRIME RESPONSIBILITIES OF PURCHASING

1. Buying (i.e. The goods needed)

HOW TO SELECT AND RATE A SUPPLIER

It can be done on the basis of