ISSUANCE

FSS1
 ISSUANCE- direct, stores
• Process of supplying goods to the preparation
units after they have been received or stored
• Starts with a requisition form
• Requisition form-filled up by the requesting
party
-documents requested & issued products &
their costs
 INVENTORY SYSTEM
• Par stock-level of stock on hand
-amount of product that should be on hand between one
delivery and the next
-can change with product demands & available delivery
times
-if 20 cans to be delivered every MWF, it should be 20
-must be evaluated from time to time looking into:
1. Cost of carrying items in inventory
2. Amount of business/turnover frequency
3. Sales analysis
 REORDER POINT
• Point in the storage cycle when additional
products need to be ordered
• No. Of units to which supply on hand should
decrease before additional orders are placed
• Ex: 40 par stock
- 10 reorder point (ROP)
30 subtotal
+ 5 normal usage until next delivery
35 reorder quantity ( amt. that is order
when parstock goes down reorder point
 Example
• Yummy restaurant uses the perpetual order
method. One of the items to be ordered is
condensed milk. Detemine the ROP given the ff:
a.Normal usage is 12 cans/day
b.It takes 4 days to get delivery of the item
c. Par stock is set at 60 cans
d. Cans come packed 12 to a case
e. Buffer stock is at 20% of normal usage
 Example
• w/out buffer
PS=60 To illustrate:
Aug 2= 48 cans (ROP)
ROP=48 (axb) Aug 2= 12 cans (60 cans ordered)
Aug 3= 12 cans
ST=12 Aug 4 = 12 cans
Aug 5 = 12 cans + 60 cans received
+ 48 (axb)
ROQ= 60 cans or 5 cases
• With buffer
60
- 58
S.T 2
+ 48
ROQ 50 cans
* As ROP increases, ROQ decreases
 Economic Order Quantity(EOQ)
• Formula used to determine the optimum
order size
Periodic inventory
• Commonly used for maintaining inventory of
non-perishable items
• Shows amount of money tied in inventory
 Perpetual inventory
• Records amounts of products purchased, and
as items are issued for use, the amounts are
deducted from the total amount of products
on hand
• Obtain running balance of stocks on hand w/o
any physical counting done
 Physical inventory
• Taken at the close of an accounting period
• Requires counting & recording the actual no. of units
on hand of each item in stock
• Need 2 people: 1 to count, 1 to record
Formula:
opening inventory
+ purchase during the month
Total available
-closing inventory(# of units still available)
Units consumed
(# of units no longer available)
 example
Opening inventory: 10 cans
+Purchases: 60 cans(July 1-31)
Total Available: 70 cans
-Closing inventory: 20 cans
Units consumed: 50 cans
 VALUING INVENTORY
1. Actual purchase price method
• Use actual price to determine inventory value
• Most accurate but most time consuming
• Each item in inventory must have its own
price
 example
1. 4 cans @ 2.35 = $9.34 10 cans @ 2.35 (Jul1)
12 cans @ 2.30=27.6 24cans @2.50(jul7)
4cans @ 2.60=10.4 24cans @ 2.60(jul14)
=$47.40 12cans @ 2.30(jul21)
 2. First-In-First-Out Method (Latest
prices)
• Reflects the latest prices of goods
• Assumes proper rotation of stocks
Example:
12 cans @ $2.30= 27.6
8 cans @ 2.60= 20.8
$ 48.40
 3. Weighted Average Purchase Price
method
• Adding all inventory values to get a grand total
then dividing it by the total no.of units
Example:
10 cans x $ 2.35= 23.50
60.00
62.40
27.60
173.50/ 70=2.48
2.48 x 20 = 49.60
4. Latest Purchase Price method (Most
Recent Price)
• Simplest method since it uses most recent
price
• Example: $ 2.30x20= $ 46.00
5. Last-In-First-Out Method (earliest prices)
• In pricing, but uses FIFO in issuance of stocks
• Used to minimize value of closing
inventory/profit on financial statement to
reduce income taxes
• Opposite of no.3
• Example: 10 cans x 2.35=
»10 cans x 2.50
$ 48.50
 INVENTORY TURNOVER
• Measure how often an inventory has been consumed
& replenished during an accounting period
• Inventory turnover rate formula:
Total inventory=Opening I. + Closing I.
Average Inventory=Total Inventory/2
Inventory Turnover= Food Cost/ Ave. Inventory
O.I= 2,000$ The lower the I.T=the slower
C.I=3, 000 the movement of stocks
The higher the I.T=the lesser
Food Cost= 4600 the money is tight to the
business
4600/2500= 1.84
 STANDARD CONTROL PRACTICES IN
ISSUING
1. Establish issuing hours
2. Use date stamps
3. Price merchandise received
4. Use requisitions
5. Use stock report cards/bin cards/perpetual
inventory cards
6. Steward daily report
 TRANSFERS
• Occur when one unit has to acquire some items
from other units
Types of transfers:
1.Intra-unit transfer
a.Between bar&kitchen(bars& resto)
b.Between kitchen&kitchen(bar can borrow food
items from kitchen (within one org’n)
1.Inter-unit transfer-between 2 establishment
• Used in chain organizations
 ADJUSTMENTS TO COST OF FOOD
CONSUMED
• Transfer to other units (-)
• Transfer from other units (+)
• Grease sales (-)
• Steward sales (-)
• Gratis to bar (-)
• Promotion expense (-)
• Cooking liquor(+)
• Food to bar (-)
 ADJUSTED FORMULA (FC)
opening inventory
+purchases
Total available for sale
-closing inventory
=cost of food issued
+cooking liquor
+transfer from other units
-food to bar (directs)
-transfer to other units
-grease sales
-steward sales
-gratis to bar
-promotional expenses
=cost of food consumed
-cost of employee meal(true for hopitals)
=COST OF FOOD SOLD