Purchasing and Inventory Flashcards

Which purchasing method involves buying a set quantity of product whenever stock falls below a predetermined level?

Answer: Par stock system

The par stock system triggers a purchase order when on-hand quantities drop below the established minimum (par) level.

A foodservice operation receives a shipment of ground beef that feels warm to the touch. What is the FIRST action the receiver should take?

Answer: Check the internal temperature with a calibrated thermometer

Temperature must be verified with a calibrated thermometer before making an accept/reject decision.

Which of the following BEST describes an 'open market' purchasing method?

Answer: Competitive bidding among multiple suppliers for each order

Open market purchasing involves soliciting competitive bids from multiple suppliers, typically for each individual purchase.

When calculating the cost of goods sold (COGS), which formula is correct?

Answer: Opening inventory + Purchases – Closing inventory

COGS = Opening inventory + Purchases – Closing inventory measures how much food was actually used in the period.

A distributor offers a 2/10 net 30 payment term. What does this mean?

Answer: A 2% discount if the invoice is paid within 10 days; full amount due in 30 days

2/10 net 30 means the buyer earns a 2% discount by paying within 10 days; otherwise the full invoice is due in 30 days.

Which document is used to formally notify a supplier of items being returned due to quality issues?

Answer: Debit memo

A debit memo is issued by the buyer to notify the supplier that returned goods have been charged back to the supplier's account.

What is the primary purpose of using a specification sheet (spec sheet) in purchasing?

Answer: To define the exact quality standards required for each product

Specification sheets establish precise quality, size, grade, and other standards so every vendor bids on identical product criteria.