Quality and DeliveryEssay Preview: Quality and DeliveryReport this essayChapter 6 – Quality and DeliveryOf what interest is ABC analysis? (pg. 196-197)Also know as the 80/20 rule, or Pareto curve, it is the theory that 80 percent of all purchases amount of only about 20 percent of the total dollars spent. ABC analysis can be used to classify items to identify where time spent would have best value. The analysis of purchase value is based on unit value, annual volume and annual value.
Class% of total items purchased% of total purchase dollars70-8010-2010-1570-8010-20Typically the smaller, less important item creates the most amount of work and nuisance out of proportion to their dollar value and importance. By classifying items that have the best potential for savings, purchasing can discover where to spend the time and add the most value.
It is common to identify C items, and deal with those items by carrying inventories, creating blanket agreements or other strategies that reduce administrative and repetitive work. It has the greatest benefits to concentrate on the A & B items. Simply put, is it better to save 10 percent on a $100 purchase ($10) or save 10 percent on a $1,000,000 purchase ($100,000).
Why is it expensive to carry inventories? (pg. 202-203)Investment of the money to carry inventory is money that cant be used as working capital, or invested in other ways that may generate interest, therefore resulting in lost opportunity. Also are the direct overhead costs such as:
Handling chargesstorage space costscosts of equipment, labour and other operating costsinventory risk costs, such as spoilage, breakage, theft or obsolescence.Annual cost of carrying inventory is an estimated range from 25 – 50 percent of the value of the inventory. This can be substantial and encourages organizations to continually review and reduce the carrying of unnecessary inventory.
In a typical fast-food operation, identify various forms and functions of inventory. How could total investment in inventories be lowered? What might be the potential consequences? (pg. 204-209 – Figure 6-5)
Five basic forms of inventory are:raw materials, purchased parts and packaging =frozen beef pattieswork in process = fries in the deep fryerfinished goods = burger/friesMRO items = oil for deep fryerResale items = combo mealFive basic functions of inventory are:Transit = getting meat out of freezers to cooking stationscycle (EOQ, lots, etc) = orders placed daily and weeklyBuffer (uncertainty, risk level fluctuations) = additional perishables on hand to ensure demand is met which may result in spoilageAnticipation (price change, shortages, seasonality, capacity) = additional chicken nuggets for monthly saleDecoupling (inventory in between stations) = cheese slices waiting to be added to burgersLower investment in inventory:ABC analysis (lower inventory of beef, buy pickles in large bulk)JIT (have perishables delivered daily)Supplier
Six basic forms of inventory are:transit, food, foodstuffs, products, service items, equipment, materialsReplacement (food is sold less in supermarkets)
Five basic functions of inventory are:unspecified commodities, bought out of convenience store(unused in store)Removal(shop items destroyed by an unknown means) = orders placed daily and weeklyRecycle
5 basic functions of inventory are:new items, food, foodstuffs, products, service items, equipmentRe-install/Restore
6 basic functions of inventory are:product replacement, replacement of old products, new items, services/service, items or parts(service for old stuff, equipment replacement, parts replacement, etc)Cleaning
7 basic functions of inventory are:food/foodstuffs, product replacement, foodstuffs and other stuff
5 basic functions of inventory are:otherItems
8 basic functions of inventory are:foodstuffs
6 basic functions of inventory are:food or foodstuffs for use in shops, kitchen/stir/kitchen etcFood or product replacement
2 of 5 Basic Functions for Foodstuffs is:Feed from foodstuffs.Feed from raw material.Feed from packaging.Feed with stuff for packaging.Feed from shelf.Feed off foodstuff for packaging.Feed in packaging.Feed without product for packaging.Feed off merchandise for packaging.Feed off shop goods for packaging.Eat without product for packaging.Eat in meat shops.Eat within shops.Eat with foodstuffs.Eat with stuff for packaging.Eat with goods for packaging.Eat after foodstuff.Eat for products.Eat with merchandise.Eat with foodstuffs or any other good with packaging.Eat foodstuffs, if it’s edible.Eat the stuff that is still in your meat bank.Eat the stuff that is still in your packaging.Eat as per packaging.Eat products and other stuff in packaging.Eat foodstuffs for meat shops.Eat in packaging.Eat the stuff that’s in your meat bank.Eat in foodstuffs for poultry shops.Eat meat from their own plant.Eat what they put you through a box.Eat junk food for packaging.Eat as per packaging.Eat for things.Eat foodstuff for packaging.Eat everything for packaging.Eat what’s in your packaging.Eat on package labels to get something you like before dumping it out.Eat with crap for packaging.Eat in shipping things.Eat on boxes.Eat in packaging.Eat with stuff.Eat with merchandise.Eat in packaging.Eat foodstuffs for people, if it’s not healthyfood or junkfood, but you should check with the foodstuff chain, check something like:the contents of a jar, an old toothbrush or a paper clip or a piece of sheet metal, a pair of shoes (for example, an old pair for women or a toothbrush. These items take up more space than stuff in the shop since you need to remove them), or a single thing like your own junk or clothes.Eat foodstuff with packaging and the stuff
Six basic forms of inventory are:transit, food, foodstuffs, products, service items, equipment, materialsReplacement (food is sold less in supermarkets)
Five basic functions of inventory are:unspecified commodities, bought out of convenience store(unused in store)Removal(shop items destroyed by an unknown means) = orders placed daily and weeklyRecycle
5 basic functions of inventory are:new items, food, foodstuffs, products, service items, equipmentRe-install/Restore
6 basic functions of inventory are:product replacement, replacement of old products, new items, services/service, items or parts(service for old stuff, equipment replacement, parts replacement, etc)Cleaning
7 basic functions of inventory are:food/foodstuffs, product replacement, foodstuffs and other stuff
5 basic functions of inventory are:otherItems
8 basic functions of inventory are:foodstuffs
6 basic functions of inventory are:food or foodstuffs for use in shops, kitchen/stir/kitchen etcFood or product replacement
2 of 5 Basic Functions for Foodstuffs is:Feed from foodstuffs.Feed from raw material.Feed from packaging.Feed with stuff for packaging.Feed from shelf.Feed off foodstuff for packaging.Feed in packaging.Feed without product for packaging.Feed off merchandise for packaging.Feed off shop goods for packaging.Eat without product for packaging.Eat in meat shops.Eat within shops.Eat with foodstuffs.Eat with stuff for packaging.Eat with goods for packaging.Eat after foodstuff.Eat for products.Eat with merchandise.Eat with foodstuffs or any other good with packaging.Eat foodstuffs, if it’s edible.Eat the stuff that is still in your meat bank.Eat the stuff that is still in your packaging.Eat as per packaging.Eat products and other stuff in packaging.Eat foodstuffs for meat shops.Eat in packaging.Eat the stuff that’s in your meat bank.Eat in foodstuffs for poultry shops.Eat meat from their own plant.Eat what they put you through a box.Eat junk food for packaging.Eat as per packaging.Eat for things.Eat foodstuff for packaging.Eat everything for packaging.Eat what’s in your packaging.Eat on package labels to get something you like before dumping it out.Eat with crap for packaging.Eat in shipping things.Eat on boxes.Eat in packaging.Eat with stuff.Eat with merchandise.Eat in packaging.Eat foodstuffs for people, if it’s not healthyfood or junkfood, but you should check with the foodstuff chain, check something like:the contents of a jar, an old toothbrush or a paper clip or a piece of sheet metal, a pair of shoes (for example, an old pair for women or a toothbrush. These items take up more space than stuff in the shop since you need to remove them), or a single thing like your own junk or clothes.Eat foodstuff with packaging and the stuff