Unit- 4 Storage and Inventory Control

Unit-4

STORAGE AND INVENTORY CONTROL

Storerooms-
The store room is like a bank and the only difference is that instead of money goods are deposited and issued to it  and from it. Like money rate accountability must be exercised for goods also. Cost consciousness must be instilled in the minds of the employees of the hotel.
the store room is a service department under the manufacturing division of an organisation.the word storing means holding in custody and keeping under control all the commodities and materials in Raw stage, semi processed and sometime fully processed stage. Open only one Kane at a time and consume at first following the FIFO method.
To maintain adequate supply of food as per the need, with minimum loss through spoilage,proper conditions are necessary to be maintained in the store rooms. Proper control system of the movement of the goods must be designed suiting the requirement of the establishment. The size of store room will be determined in whether the supplies will be e e delivered daily or not and the ratio of fresh food to Frozen Food.

Objective of Storing-

1. To  maintain adequate supply of various commodities as per the need of the establishment.
2. To minimise loss of stock due to spoilage and pilferage-keeping the commodities under control and custody.
3.Maintaining the material in clean and orderly manner.


Types of stores
Usually there are three type of store room in a catering establishment
(A). Centralized
(B).decentralized
(C).centralized with sub stores

(A). Centralized stores: most commonly used in small establishments where the number of production centers may not be many. For example, restaurants and small hotels where receiving and issuing are done from centralized stores.
ADVANTAGES-
1. Better and easy control can be exercised.
2. Better layout of the store can be done.
3. Total space required will be less.
4. Less number of equipment.
5. Less overheads.
6. Low pay bills of the staff.
7. Less cost of stationary.
8. Easy inventory control and stock taking.

DISADVANTAGES-
1. Main cause crowded conditions particularly in large hotel.
2. Delay and inconvenience due to extra work load in the department.
3. Cost of transportation of goods from production center is more and has the total cost might increase.
4. The suppliers and the persons from the kitchen who come to collect their supply I may reach at the same time and hence create confusion and chaos in the store.

(B). Decentralized Stores:
In this stores are situated at various places near the production center of the hotel. For example, the hotel may have various types of food outlets and Restaurant situated at different places in the hotel, such as the coffee shop near the lobby, Chinese restaurant on the ground floor, bar near the lobby and on different floors catering outlet near the swimming pool or fast food restaurants somewhere near the hotel entrance etc. In such case the production center has a separate store room attached to it and there is no need of any centralized one. The need for such store room is for those establishments where the outlets are located quite for off from one another and each outlet has its separate production center. The decentralized tour in these cases is parts of kitchen itself and control by some senior staff of kitchen.

Advantages:
1. Quick delivery
2. No hassles, the waiting time is reduced. No waiting queues for delivery or for collecting the supply of food store.
3. No bottle necking in the main Store.
4. All disadvantages of centralized storing are overcome in this case.

Disadvantages:
1. High cost of infrastructure.
2. Cost of equipment increases.
3. Cost of labour and stationery also increases.
4. High overhead costs.
5. Maintenance becomes costly.
6. More complicated MIS.

(C).  Centralized with sub-stores:
In this system, sub-stores are are attached with the various production centres. For example , there can be a main kitchen, floor kitchen, a fast food kitchen etc and all these production centres can be at different places and far from each other and may not have any connection with each other's production.in such cases the main store of the hotel supplies various non perishable items to these sub stores( the supplies are issued on the basis of a fixed pattern of production of each of these production centers).Further, the production center draw their supplies from these sub stores on the basis of the same principle as that of centralized Store.
Advantages-
1. Production is quick and fast as it is not hampered for delay in supplies.
2. Easy control of individual Store.
3. All the advantage of decentralized Stores.

Disadvantages-
1. It requires more staff.
2. More clerical work.
3. Final consolidation of accounts of consumption becomes difficult.
4. More labour cost and labour problems.


Main features of pilferage control are:

1. Checking challans with the store ledger.
2. Checking challans with the store day book.
3. Checking challans with orders on suppliers.
4. Keeping details stock's account.
5. Making frequent spot test in stores by the internal audit or others with store ledger accounts and bin cards.
6. Making a complete periodical stock report and comparing the finding with store's ledger accounts and bin cards.
7. Comparing and linking a stores received with the financial books.
8. Effective checks on issues by reference to issues and user.
9. In respect of issues to a kitchen a good check on consumption is affected by yield test of the ingredient. A competent chef can calculate with considerable accuracy the quality of ingredients required for a given recipe, taking into account unavoidable wastage. The figures (comprised in details) of ingredients (used as shown by costing) help to locate pilferage and unnecessary wastage done by the chef in the kitchen.

 The types of storage can also be as follows:

Depending upon the perishability and non perishablility factors of commodity planning of the types of store room is done into 3 groups-
(A) Perishable
(B)Semi perishable
(C)Non perishable items

(A) this group commodities are meat, fish , poultry,  beef and game birds, milk and milk products, various types of breads and cereal products, butter,  cream and cheese fruits, vegetables and cook food.

(B) Under this group we may put cereals, pulses, flake items, roasted nuts and fried potatoes, eggs, cakes, biscuits, cookies etc and semi cooked foods.

(C). This group contains cook foods, preserves, dry roasted cereal product, sugar, tea, coffee, chocolate ,oil and fats, spices condiments etc.
STOCK LEVELS-
The term stock levels refers to the different levels which should be maintained carefully for an undisturbed supply of  commodities to be given to the production center to maintain their schedule. The level at which the stock of any item is to be maintained is difficult to determined,as there is always danger of other running out of stock of an item or of stock taking. It is the responsibility of a store keeper to constantly look into the various level of stock by perpetual inventory of the commodities. The objective of maintaining the level is to control cost and money management.
Factors for Determining various stock levels-
1. Capital availability in the budget.
2. Storage space.
3. Cost of storage.
4. The keeping quality of the material.
5. Possibility of loss due to evaporation.
6. Further production plans.
7. Shelf life of the communities.
8. Supply conditions
9. The maximum and minimum forecasted uses of the commodity for a specific period inconsideration which will be based on volume forecast of sales and past history.
10. Lead item and the recording time for the item.
11. The economic ordering, quality, delivery, price and scarcity.
12. Rates of obsolescence.
13. Market trends including changes in delivery time, price and scarcity.

Minimum Stock Level:

The minimum stock level as the name suggest is that stock position of the commodity in the stores below which the stock of the commodity should not be allowed to fall, and that much of stock must always be maintained. The store keeper will I know that these positions of stock of the commodity has reached from the stock ledger and the bin cards and he should immediately initiate the process of replenishment to ensure that production is not held up due to shortage of any material. The factor that affects the fixation of this level are are the time and rate of consumption of material during the lead time.
For example if the average weekly consumption of a commodity is 10 kg and the lead time is 4 weeks, the total consumption during the lead time will be 40 kg. This means that 40 kg of stock should be available between placing the order and the receipt of the fresh supplies of the concerned commodity. The fresh stock of this commodity must be ordered by the purchase department before it falls 240 kg level. Now, sometime the production may increase from anticipated figures or if at times the fresh supplies take longer for the order to be delivered, in such case there may be problem and the production may hamper.

Maximum stock level:

The maximum stock level is that quantity of a particular material above which the stock of that commodity should not increased in the store room at any time. If the stock is increased then there is always a problem of storing it under correct conditions and instead of of being beneficial this may prove to be more expensive. There may be losses due to obsolescence, pilferages and spoilage because the store is designed to stop safely only the maximum level of commodity. Many times, in order to consume the surplus stock which is above the maximum level, some changes in the  menus pardon so that the stock may finish quickly.
Buying the commodity above the maximum stock level blogs money unnecessarily, and maybe something else which should have been on the priority purchase is neglected.Further, it requires more safety and security precautions as the extra stock may not find any safe ossicular places in the store room to be stored and maybe easily pilfered or spoiled. Even if some extra space is created in store, this extra stock and maintenance cost of the area involved would increase the expenses. Hit mein create monotony on the menu. Control will become difficult and extra load of work ok will be on the manpower working in the stores. This might prove to be very expensive particularly in case of commodities market where there is always a possibility of depression.
Fixation of the maximum stock level is done by the the purchase Manager for which the hotel should device a policy and following factors should be considered:
1. Size and capacity of the store room.
2. Size and capacity of the Bin.
3. Total money allocated in the budget for the purchase of an item. This is an an important factor and needs revision from time to time because the prices of the commodity keep on changing frequently.
4. The forecast consumption of the commodity for a specific period.
5. The cost of storage space, which includes the proportionate insurance charges.
6. To equality shelf life of the degree of perish ability of the commodity.
7. Factors such as obsolescence, deterioration and evaporation of the commodity.
8. The foretasted production schedule which is usually prepared by the chef in consultation with the food and beverage manager and food and beverage marketing division of the hotel.
9. The market situation and its proximity to the hotel.
10. Conditions of supply.

Par Stock-

par stock is that level of the stock of the commodity which is just enough for meeting the the demand for production for a specific period of time. It is also called as working order stock.
If perishable items don't have adequate storage facilities like deep freezer and cold room, normally no par stock is maintained. To meet certain emergencies, unexpected demands and rejection of a particular consignment, the par stock of minimum one day should be maintained. Usually, 15 days per stop for items such as rice, daal, sugar, flour,besan etc. Should be maintained. Similarly, items like bottle and can should be in order as per the par stock.
what stock is the minimum stock level to be maintained in the store for a particular item. This stock is maintained to meet an emergency  or unexpected demand. The past stock level is calculated on the basis of ;
1.The Budget.
2.The available storage space
3.Turnover of the item.
4.frequency of supply.

For example if the Bustard need of v given by the Chef is 50 kg of price this quantity only will be in the store room.

Buffer Stock-
Safety margin is also called as reserve stock or safety margin. This talk is over and above the regular par stock.For example if the cost of a commodity is hundred kg and 20kg is its buffer stock, 120 kg should be purchased.

Re-ordering Level-
The reordering level is that stock level of a commodity on which the order for fresh supply must be placed. In this case due consideration to the lead time must be given. This is set in advance.
Apparently there is no difference between the minimum stock level and the reordering level and only one of them maybe maintained but in certain cases it is observed that the reordering level figure means the stock level figure without the safety margin, while they considered that minimum stock level should also be included in the safety e margin level stock. Windows establishments where both (minimum stock level and reordering level stock) are fixed, the difference of quantity between the two level should be sufficient enough to meet the requirement of the production till the fresh supply is obtained. The formula for reordering level is
ROL=PL X B
Where ROL stands for reordering level, PL means  future demand of item X, expected head time and B stand for the buffer stock.

Danger Level-
Danger level is the level which should never be reached. If it is reached, supply to the production centre must immediately be stopped. This situation should never arise. It reflects the inefficiency of the store keeper and may arise because of improper inventory control. This is a war like situation where the store keeper will have to inform the purchase Manager to take some emergency action for the replacement of the commodity. This may warrant purchase of the commodity at a high price which will ultimately affect the cost of the food.
The above study may be summarised as follow;
1. The minimum and maximum level are fixed on forecast figure of the trading period.
2. The reordering time and quantity.
3. The Economic Ordering Level.
4. Market trends,including changes in the delivery, price and scarcity.
5. Storage space available.
6. Shelf life of the item
7. Budget available for purchasing.

LEAD TIME:
Lead time is the time period which is between two activities
(a). Initiation of purchase procedure of commodities.
(b). The receiving of the the commodity.
For Example, the store keeper decide that 100 kg of rice Shall be  needed to bring the stock level of rice to the maximum level after 5 weeks, and on this basis he initiated the purchase procedure now, and orders the supplies to send rice because he knows that the suppliers needs 5 weeks to supply it. This period of 5 weeks is the  lead time.





The lead time is usually divided into two components:
(a). Internal Lead Time
(b). External Lead Time.
the internal Lead time refers to the period which the manager requires to complete the paperwork for the purchase of the commodity which involves activities like
(a) raising of a requisition
(b) selecting a supplier
(c) inviting the tenders and quotations
(d) Processing and scrutiny.
(e) raising the purchase order
(f). Placing the order
(g) visit to the factory of the supplier
(h) supplier time to complete production
(I) transportation time and receiving and sending time.
All these factors should be considered while fixing the internal Lead time. Since these factors involve various staff of Hotel and the procedure is  carried out within the hotel, this is called internal Lead time and if properly planned and  efficiently worked, it can be reduced to the minimum possible.