MANAGING

INVENTORY

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What is inventory?

NON-RECYCLED INVENTORIES

RECYCLED INVENTORIES

What are the costs of holding inventory?

INVENTORY MANAGEMENT

PAR STOCK

CALCULATION

INVENTORY CONTOL

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What Is Inventory?
Inventory refers to the stock of any item
or resource used in an organization
that can be in the following forms:
• Raw materials
• Work-in-process
• Finished goods
• Component parts
• Supplies

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 What is inventory?

The executive housekeeper plans appropriate

inventory levels by answering the following
questions:
What amount of equipment and supplies will
be needed for the housekeeping staff to meet
the performance and productivity standards of
the department?

There are two type of inventories

Recycled Inventory
Non-recycled inventory.

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 NON-RECYCLED INVENTORIES
• Include cleaning supplies, guest
supplies such as bath soap and guest
amenities which may range from, tooth
paste, shampoos, conditioners to
loofa, bath salts etc.

• Since non - recyclable items are used up

during operations, inventory levels are
closely tied to the purchase ordering
system.

• A purchase ordering systems for non -

recyclable items establish a par
number that is based on two figures -

• A minimum quantity and a maximum

quantity .
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RECYCLED INVENTORIES
• Include linen, most equipment and some guest
supplies.
• Recycled equipment includes, room attendant
cart, vacuum cleaners, floor buffers, carpet
shampooing machine and guest supplies such
as iron, iron board, cribs and refrigerator.
• Responsible for storing and maintaining these
items as well as issuing them as requested by
guest.
• The number expressed as par number.
• Par refers to the standard number of items that
must be on hand to support daily, routine
housekeeping operations.
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 What are the costs of
holding inventory?
There are two cost categories associated
with inventory

1) The Cost To Carry Inventory, And

2) The Cost Of Not Carrying

Inventory.

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 1) The Cost To Carry Inventory
Includes the unit materials cost; the cost of ordering
them or reordering them; and the carrying or holding
costs.
• When firms produce as well the materials that they
need for production, the reorder cost is being
substituted by the cost to set up the machine or
perform change over activities.
• The carrying or holding costs generally include the
costs of storage, fire and theft insurance, and
warehouse administration.
BH M -314 ,5T H S EM -2022-23/PPT ACOP/ MANAGING
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 Primarily relate to the loss of
2)
customer goodwill and lost
The Costs
revenues in case shortages or
Of Not
stock outs occur, not to mention
Carrying
the possibility of such incident
Inventory
being relayed to potential
customers.

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INVENTORY MANAGEMENT
Inventory management deals with inventory
planning and control. Inventory planning
seeks to answer two basic questions:

1. When to Order -This question is related

to the concept of the reorder point .

This is a system whereby any regularly used

material is re-ordered when the inventory
drops to a certain level. This level is usually
a function of the lead time, daily demand,
and safety stock.

2.How Much to Order - The quantity to be

ordered is determined through the Economic
Order Quantity.
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 There are two (1) The Fixed-
basic Order Quantity Model
inventory
planning (2) Fixed-Time
systems
Period Model.

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The Fixed-Order Quantity Model

1) The inventory policy of firms employing the Fixed-

Order Quantity Model will be to order a standard
quantity when the reorder point has been reached
regardless of when this occurs. This is event-triggered
and depends on the demand for the items. This model
is applicable for:
• More Expensive Items
• More Important / Critical Items
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 1. Is the other inventory planning system where
inventory policy is to order materials or parts
at a designated time period regardless of
whether the reorder point has been reached.

2) The Fixed- 2. This is time-trigg er ed and involves no

physical count of inventory items.
Time Period 3. This is applicable under the following

Model conditions:
• Less expensive and less critical items
• Vendors / buyers can get fresh orders if they
make regular / routine visits to customers
• Vendors / buyers will combine orders to
reduce ordering and transportation costs

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 What is a par level?
Periodic Automatic Replenishment or PAR Levels are minimum
and maximum quantity limits that you set for a certain item
Determining the par levels
Par levels are determined differently for the two types of
inventories. Inventory levels for recycled items are measured in
terms of a par number. The par number is a multiple of the
standard quantity of a particular inventory item that must be on
hand to support day-to –day housekeeping functions.

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 1) Minimum Quantity and Maximum Quantity.

The minimum quantity is the fewest number of

purchase units that should be in stock at any time.
Purchase units are counted in terms of size, containers
ESTABLISHING PAR
and so on. The inventory level should never fall below
LEVELS FOR GUEST the minimum quantity.
SUPPLIES The minimum quantity for any given cleaning supply
Non recycled item is determined by adding the lead time quantity to
inventories the safety stock level for that item.

² The lead time quantity refers to the numb er of

purchase units that are used up between the time that a
supply order is placed and the time that the order is
received.

² The safety stock levels for a g iv en cleaning sup p ly

item refers to number of purchase units that must
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smoothly.
 1) The actual number of additional supplies that
must be ordered is determined by the
maximum quantity. The maximum quantity is
ESTABLISHING the greatest number of purchase units that should
PAR LEVELS FOR be in stock at any time.

GUEST SUPPLIES · The maximum quantity must be consistent

Non with available storage space

Recycled inventories · Must not be so high that large amount of the

hotel’s cash and resources are tied up in an
overstocked inventory.

· The shelf life of an item also affects the

maximum quantity of purchase units that can be
stored.
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 • I nv entory lev els & usag e rate for g uest sup p ly
should be carefully monitored & adjusted as
necessary.

• Ex housekeeper may use occupancy forecast to

calculate par levels of guest supplies & amenities on
a monthly basis.

• Par stock levels for stationary items such as

notepads, letterheads envelopes, & postcards are
established in the usual manner for non - recycle
inventory items.

• Occup ancy lev els usag e rates, safety lev els, lead
time quantities, and purchasing schedules are
considered when determining minimum & maximum
quantity levels.
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 TASK

• Calculate Linen Par for

hotel with 20 Dl room, 30
twin room and 2 suites
having inhouse laundry and
a 4 star hotel

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 · Strict issuing
procedures

INVENTORY · Accurate information

& records maintained
CONTROL OF
GUEST
· Perpetual inventory
SUPPLIES

· Physical inventory
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 • The number & type of equipment that
need to be maintained in-house will
depend on the hotel’s size & cleaning
needs.
INVENTORY
• Equipment needs are also affected by the
OF MACHINES
no. of guestrooms and their location, the
AND kind of floors wall coverings & the size of
EQUIPMENT laundry operations.
• The housekeeper should also keep a list
of all machines & equipment stored in
housekeeping
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 · Maintaining accurate
· Establishing issuing
inventory records (card
procedures (issue log).
index system).

INVENTORY CONTROL
OF MACHINES & · Physical inventories
· Ensuring that
EQUIPMENT should be taken
storage areas are secure.
quarterly.

· Machines &
equipment should be
tested to ensure they are
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 QUESTION ?

BHM- 314 ,5T H S EM- 2022- 23/ P P T ACOP /

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 THANK YOU

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