Table of Contents
Q.1. What do you mean by cost? Discuss the various elements of cost. Differentiate between variable and semi-variable cost.
Cost is the amount of expenditure incurred on producing and selling goods or services. In the hospitality industry, cost is an important aspect that needs to be controlled effectively to maximize profits. The various elements of cost are as follows:
- Direct cost: These are the costs that are directly associated with the production of goods or services, such as raw materials, labor costs, and packaging expenses.
- Indirect cost: These are the costs that are not directly associated with the production of goods or services, such as rent, utilities, and administrative expenses.
- Fixed cost: These are the costs that remain constant regardless of the level of production, such as rent, salaries, and insurance.
- Variable cost: These are the costs that vary according to the level of production, such as raw materials, labor costs, and packaging expenses.
- Semi-variable cost: These are the costs that have both a fixed and variable component, such as utilities, maintenance, and repairs.
Variable and Semi-variable Cost
The main difference between variable and semi-variable cost is that variable costs change in proportion to the level of production, while semi-variable costs have both a fixed and variable component.
Variable costs are directly related to the production of goods or services, and therefore, they increase or decrease with the level of production. For example, the cost of raw materials, labor, and packaging expenses are all variable costs.
Semi-variable costs have both a fixed and variable component. The fixed component of the cost remains constant regardless of the level of production, while the variable component changes with the level of production. For example, the cost of utilities, maintenance, and repairs are all semi-variable costs. The fixed component of these costs includes expenses such as rent or insurance, while the variable component includes expenses such as usage charges or repair costs.
In conclusion, cost is an important aspect of the hospitality industry, and it is important to understand the various elements of cost and the differences between variable and semi-variable costs in order to effectively control costs and maximize profits.
OR Define control. Explain the aims and objectives of control. State the characteristic of an effective control system
Food & Beverage Control is the process of managing food and beverage operations in a hospitality establishment, such as a restaurant, bar, or hotel, to ensure that costs are controlled effectively and profits are maximized. The control process involves establishing standards, monitoring performance, comparing actual results to established standards, and taking corrective action when necessary.
Aims and Objectives of Control
The main aims and objectives of food & beverage control are as follows:
- To control costs: This involves monitoring the costs of raw materials, labor, and other expenses to ensure that they are within budget and that profits are maximized.
- To maintain quality: This involves ensuring that the quality of food and beverage products is consistent and meets established standards.
- To ensure customer satisfaction: This involves ensuring that customers are satisfied with the products and services provided, and that their expectations are met or exceeded.
Characteristics of an Effective Control System
An effective control system should have the following characteristics:
- Accuracy: The system should provide accurate and reliable information to enable effective decision-making.
- Timeliness: The system should provide timely information to enable timely decision-making and corrective action.
- Relevance: The system should provide information that is relevant to the needs of the organization and the control process.
- Flexibility: The system should be flexible enough to adapt to changing circumstances and requirements.
- Cost-effectiveness: The system should be cost-effective and provide value for money.
- Integration: The system should be integrated with other systems and processes to enable effective communication and coordination.
In conclusion, food & beverage control is an essential process in the hospitality industry that involves managing costs, maintaining quality, and ensuring customer satisfaction. An effective control system should have the characteristics of accuracy, timeliness, relevance, flexibility, cost-effectiveness, and integration.
Q.2. What is purchasing? Briefly explain the various methods of purchasing used in catering industry.
Purchasing is the process of acquiring goods and services needed for the operation of a business or organization. In the catering industry, purchasing involves acquiring food, beverages, and other supplies necessary for the operation of a foodservice establishment, such as a restaurant or hotel.
Methods of Purchasing Used in Catering Industry
There are several methods of purchasing used in the catering industry, which are as follows:
- Centralized purchasing: In this method, purchasing is managed by a central purchasing department, which is responsible for acquiring all goods and services needed for the operation of the business. This method enables bulk purchasing and can result in cost savings due to economies of scale.
- Group purchasing: In this method, several establishments or businesses come together to purchase goods and services in bulk, which results in cost savings due to economies of scale.
- Decentralized purchasing: In this method, each department or location of the business is responsible for their own purchasing, which allows for greater flexibility and responsiveness to local needs.
- Just-in-time (JIT) purchasing: In this method, goods are ordered and received just in time for their use, which reduces the need for inventory storage and can result in cost savings.
- Electronic purchasing: In this method, purchasing is done electronically, using the internet or other electronic means, which enables faster and more efficient purchasing.
- Blanket purchasing: In this method, a single purchase order is issued for a specific period of time, such as a month or a year, which enables the establishment to take advantage of bulk purchasing discounts and ensures a steady supply of goods.
In conclusion, purchasing is an important aspect of the catering industry, and there are several methods of purchasing used in the industry, including centralized purchasing, group purchasing, decentralized purchasing, just-in-time purchasing, electronic purchasing, and blanket purchasing. The choice of purchasing method will depend on the needs and goals of the establishment.
OR Prepare the job description of a purchase manager of a five-star hotel.
The Purchase Manager of a five-star hotel is responsible for managing the purchasing activities of the hotel, ensuring that the hotel obtains the necessary goods and services at the best possible price and quality. The following is a job description for a Purchase Manager of a five-star hotel:
Position Summary:
The Purchase Manager is responsible for managing the purchasing activities of the hotel to ensure that goods and services are acquired at the best possible price and quality.
Key Responsibilities:
- Develop and implement purchasing policies and procedures to ensure that all purchasing activities are conducted in a consistent and efficient manner.
- Identify and evaluate suppliers to ensure that they meet the quality, delivery, and price requirements of the hotel.
- Negotiate contracts with suppliers to obtain the best possible terms and conditions for the hotel.
- Monitor supplier performance to ensure that they meet the quality and delivery requirements of the hotel.
- Manage the inventory levels of goods and supplies to ensure that the hotel has an adequate supply of necessary items.
- Maintain accurate records of purchasing activities to ensure compliance with financial and legal requirements.
- Manage the purchasing staff to ensure that they are trained and motivated to perform their duties effectively.
- Work closely with other departments of the hotel to ensure that their purchasing needs are met in a timely and efficient manner.
Qualifications:
- Bachelor’s degree in business administration, supply chain management, or a related field.
- At least five years of experience in purchasing and procurement, preferably in the hospitality industry.
- Strong negotiating skills and the ability to work with suppliers to obtain the best possible terms and conditions.
- Excellent communication and interpersonal skills to work effectively with suppliers and other departments of the hotel.
- Ability to analyze data and make informed purchasing decisions.
- Proficiency in computer software applications, such as Microsoft Office and purchasing software.
- Knowledge of legal and financial requirements related to purchasing activities.
Q.3. Explain the objectives of receiving. Distinguish between blind receiving and routine receiving procedure.
Receiving is the process of checking and accepting goods and supplies delivered to a hospitality establishment. The objectives of receiving are as follows:
- To ensure that the goods and supplies delivered meet the specifications and requirements of the establishment.
- To ensure that the quantity of goods and supplies delivered is accurate and matches the order placed.
- To ensure that the quality of the goods and supplies delivered is acceptable and meets the established standards.
- To ensure that the delivery is timely and the goods and supplies are available when needed.
- To ensure that the cost of the goods and supplies delivered is accurate and matches the agreed-upon price.
Blind Receiving and Routine Receiving Procedure
Blind receiving and routine receiving are two different procedures used in the receiving process in the hospitality industry. The main differences between the two procedures are as follows:
- Blind Receiving: This procedure involves not disclosing the contents of the delivery to the receiver until after it has been checked and accepted. This procedure is used to ensure that the receiver is not influenced by the contents of the delivery and that all deliveries are checked and accepted based on their specifications, quantity, quality, and cost.
- Routine Receiving: This procedure involves disclosing the contents of the delivery to the receiver before it is checked and accepted. This procedure is used when the supplier has a good reputation for delivering the correct goods and supplies and when the establishment has a good relationship with the supplier.
In conclusion, receiving is an important process in the hospitality industry that involves checking and accepting goods and supplies delivered to an establishment. The objectives of receiving are to ensure that the goods and supplies delivered meet the specifications, quantity, quality, and cost requirements of the establishment. Blind receiving and routine receiving are two procedures used in the receiving process, and they differ in terms of whether the contents of the delivery are disclosed to the receiver before or after checking and acceptance.
OR What do you mean by pricing of commodities? Discuss the various methods used for pricing of commodities.
Pricing of commodities refers to the process of determining the price of goods or services in a competitive market. The objective of pricing is to set a price that maximizes profits while remaining competitive in the market. In the hospitality industry, pricing is an important aspect of revenue management and profitability.
Methods Used for Pricing of Commodities
There are several methods used for pricing of commodities in the hospitality industry, which are as follows:
- Cost-plus pricing: In this method, the price is determined by adding a markup to the cost of the goods or services. The markup is usually a percentage of the cost, and it covers the operating expenses and profit margin.
- Value-based pricing: In this method, the price is determined by the perceived value of the goods or services to the customer. This method takes into account the customer’s willingness to pay for the product or service.
- Competitor-based pricing: In this method, the price is determined by the prices of similar products or services offered by competitors in the market. This method is used to remain competitive in the market.
- Dynamic pricing: In this method, the price is adjusted based on the demand for the product or service. The price is higher when the demand is high and lower when the demand is low.
- Psychological pricing: In this method, the price is set based on the psychological perception of the customer. For example, a price of $9.99 is perceived to be lower than $10.00.
- Bundle pricing: In this method, several products or services are offered together at a lower price than the individual prices. This method is used to encourage customers to purchase more products or services.
- Discount pricing: In this method, the price is reduced from the normal price to encourage sales. This method is used to attract price-sensitive customers.
In conclusion, pricing is an important aspect of the hospitality industry, and there are several methods used for pricing of commodities, including cost-plus pricing, value-based pricing, competitor-based pricing, dynamic pricing, psychological pricing, bundle pricing, and discount pricing. The choice of pricing method will depend on the characteristics of the product or service, the market, and the objectives of the establishment.
Q.4. Draw the standard formats for the following (any four):
(a) Delivery notes (b) Cashier’s sales summary sheet (c) Goods received book (d) Transfer notes (e) Bin card
Q.5. What do you mean by inventory control? Explain various methods of inventory control.
Inventory control is the process of managing the stock of goods and supplies in a hospitality establishment to ensure that there is an adequate supply of necessary items while minimizing the costs associated with inventory management. The objective of inventory control is to ensure that the right items are in the right place at the right time, and that there is no overstocking or understocking of inventory.
Methods of Inventory Control
There are several methods of inventory control used in the hospitality industry, which are as follows:
- ABC analysis: In this method, items in inventory are classified into three categories based on their value and frequency of use. Category A items are high-value items with high usage frequency, category B items are medium-value items with moderate usage frequency, and category C items are low-value items with low usage frequency. This method enables effective inventory management by focusing on the high-value items that require the most attention.
- First-in, first-out (FIFO) method: In this method, the oldest items in inventory are used or sold first. This method is used to ensure that items do not become outdated or expired before they are used or sold.
- Last-in, first-out (LIFO) method: In this method, the newest items in inventory are used or sold first. This method is used when the cost of goods increases over time, as it allows the establishment to maximize profits by using the most recent, and therefore most expensive, inventory.
- Economic order quantity (EOQ) method: In this method, the optimal quantity of goods to order is calculated based on the cost of ordering and holding inventory. The objective is to minimize the total cost of inventory management, including the cost of ordering, holding, and shortage costs.
- Just-in-time (JIT) method: In this method, goods are ordered and received just in time for their use, which reduces the need for inventory storage and can result in cost savings.
- Par stock method: In this method, the establishment maintains a predetermined quantity of each item in inventory, which is known as the par stock level. When inventory falls below the par stock level, an order is placed to replenish the inventory. This method ensures that there is an adequate supply of necessary items while minimizing the costs associated with inventory management.
In conclusion, inventory control is an important aspect of the hospitality industry, and there are several methods of inventory control used, including ABC analysis, FIFO method, LIFO method, EOQ method, JIT method, and par stock method. The choice of inventory control method will depend on the characteristics of the establishment, the inventory, and the objectives of inventory management.
OR What is standard yield? Explain the process of yield testing.
Standard yield is the amount of usable product that should be obtained from a raw material or ingredient based on a predetermined recipe or formula. The standard yield is used as a benchmark for measuring the actual yield obtained during the cooking or preparation process, and any variation from the standard yield can be used to identify areas for improvement in the production process.
Yield Testing Process
The yield testing process is used to measure the actual yield obtained during the cooking or preparation process and compare it to the standard yield. The following is the process of yield testing:
- Calculate the standard yield: The first step is to calculate the standard yield based on the recipe or formula. The standard yield is the amount of usable product that should be obtained from the raw material or ingredient.
- Weigh the raw material: The next step is to weigh the raw material or ingredient before it is processed. This weight is known as the starting weight.
- Process the raw material: The raw material is then processed according to the recipe or formula, such as cooking or baking.
- Weigh the finished product: Once the processing is complete, the finished product is weighed. This weight is known as the finished weight.
- Calculate the actual yield: The actual yield is calculated by subtracting the starting weight from the finished weight.
- Compare the actual yield to the standard yield: The actual yield is then compared to the standard yield. If the actual yield is higher than the standard yield, it indicates that the process is efficient and the production is profitable. If the actual yield is lower than the standard yield, it indicates that there is a loss of raw material or ingredient and the production is less profitable.
- Analyze the results: The results of the yield test are analyzed to identify any areas for improvement in the production process. If the actual yield is consistently lower than the standard yield, it may indicate a problem with the recipe or formula, the equipment, or the production process.
In conclusion, yield testing is an important process in the hospitality industry to measure the actual yield obtained during the cooking or preparation process and compare it to the standard yield. This process helps to identify areas for improvement in the production process and ensure that the production is profitable.
Q.6. Distinguish between:
(a) Purchase order and purchase requisition
- Purchase requisition is an internal document used to request the purchase of goods or services. It is used to communicate the need for purchase to the purchasing department.
- Purchase order is an external document used to order the goods or services from the supplier. It includes details such as the description of the goods or services, the quantity, the price, and the delivery date.
(b) Ordering cost and carrying cost
- Ordering cost is the cost associated with placing an order for goods or services, such as the cost of preparing the purchase order and the cost of communication with the supplier.
- Carrying cost is the cost associated with holding inventory, such as the cost of storage, insurance, obsolescence, and interest.
(c) Perpetual inventory control and physical inventory control
- Perpetual inventory control is a continuous process of tracking inventory levels using software or a system. It involves updating inventory records in real-time, as goods are received or issued, to ensure accurate inventory levels.
- Physical inventory control is a periodic process of physically counting and reconciling the inventory levels. It involves a physical count of the inventory and comparing it to the inventory records to identify any discrepancies.
Q.7. Write short notes on:
(a) Economic order quantity
Economic Order Quantity is a model that is used to determine the optimal quantity of goods to order to minimize the total cost of inventory management. The EOQ model takes into account the cost of ordering, holding, and shortage costs to calculate the optimal order quantity. The objective of the EOQ model is to ensure that the inventory level is sufficient to meet demand while minimizing the costs associated with inventory management.
(b) Limitations of control
Control is an important aspect of management that involves monitoring and evaluating performance to ensure that objectives are being met. However, there are several limitations of control, such as:
- Control is expensive and time-consuming.
- Control cannot guarantee success or prevent failure.
- Control may lead to resistance from employees who feel that their autonomy is being compromised.
- Control may be undermined by external factors such as changes in the market or competition.
(c) Meat tag
A meat tag is a label that is attached to a cut of meat to provide information about the origin, grade, and processing of the meat. Meat tags are used to ensure that the meat is safe and of high quality, and they help to provide transparency to consumers about the product they are purchasing. The information on the meat tag includes the name of the cut, the USDA grade, the date of processing, and the establishment number of the processing plant. Meat tags are required by law for all meat products sold in the United States.
Q.8. State the reasons for preparing a standard purchase specification. Prepare a standard purchase specification for tandoori chicken.
A standard purchase specification is a detailed description of the quality and quantity requirements of goods or services to be purchased. The reasons for preparing a standard purchase specification are as follows:
- To ensure that the goods or services purchased meet the specific requirements of the establishment.
- To ensure that the quality of the goods or services purchased is consistent and meets the established standards.
- To ensure that the cost of the goods or services purchased is reasonable and within the budget of the establishment.
- To provide a basis for evaluating and comparing the performance of suppliers.
- To establish a clear understanding of the expectations and requirements between the buyer and supplier.
Standard Purchase Specification for Tandoori Chicken
Product: Tandoori Chicken Brand: Any reputable brand Packaging: Plastic container Weight: 1 kg per container Quantity: 50 kg
Quality:
- The chicken must be fresh and of high quality.
- The chicken must be boneless and skinless.
- The chicken must be marinated with a tandoori spice blend.
- The chicken must be cooked to an internal temperature of 165°F (73.9°C).
- The chicken must be free from any defects, such as bruises or discoloration.
Packaging and Labeling:
- The chicken must be packed in a clean, sealed, and labeled plastic container.
- The container must be labeled with the date of production, expiry date, and weight of the chicken.
- The container must be stored and transported under appropriate temperature conditions to maintain freshness and quality.
Delivery:
- The chicken must be delivered to the establishment within 24 hours of production.
- The delivery must be made in a clean, temperature-controlled vehicle.
- The delivery must be made during the established delivery hours and to the designated delivery location.
In conclusion, a standard purchase specification is an important document that outlines the specific requirements of goods or services to be purchased. The standard purchase specification for tandoori chicken includes the quality, packaging, labeling, and delivery requirements to ensure that the chicken meets the established standards and requirements of the establishment.
Q.9. Standard recipe plays an important role in maintaining food cost. Justify the statement.
A standard recipe is a detailed description of the ingredients, quantities, and procedures required to prepare a particular dish. Standard recipes play an important role in maintaining food cost for the following reasons:
- Consistency: A standard recipe ensures that the dish is prepared consistently every time it is made. This consistency helps to maintain the quality of the dish, which in turn helps to attract and retain customers.
- Cost control: A standard recipe includes the quantities of each ingredient required to prepare the dish. By using a standard recipe, the establishment can control the cost of the dish by ensuring that the right amount of each ingredient is used, which reduces the waste and overuse of ingredients.
- Portion control: A standard recipe includes the portion size for the dish. By using a standard recipe, the establishment can control the portion size and reduce the amount of food waste. Portion control also helps to maintain the consistency of the dish and control the food cost.
- Menu planning: A standard recipe is a useful tool for menu planning as it helps the establishment to estimate the cost of the dish and set the selling price. This information is critical in determining the profitability of the dish and the menu as a whole.
- Inventory management: A standard recipe helps to manage inventory by identifying the ingredients required for the dish. This information can be used to manage the inventory levels, order the right amount of ingredients, and reduce the risk of overstocking or understocking of inventory.
In conclusion, a standard recipe is an essential tool for maintaining food cost in the hospitality industry. It helps to ensure consistency, control costs, manage inventory, plan menus, and control portion sizes. By using a standard recipe, the establishment can improve the quality of the food, reduce the waste of ingredients, and increase profitability.
Q.10 A State True or False:
(i) Staff meal is included in the food cost.
False: Staff meal is not included in the food cost because it is not sold to customers, and its cost is considered a staff benefit.
(ii) Standard purchase specification is prepared by the General Manager of a hotel.
False: Standard purchase specification is not prepared by the General Manager of a hotel. It is usually prepared by the Chef or the purchasing department, who have expertise in the product and knowledge of the quality standards.
(iii) Lead time is the time gap between ordering and receiving of a raw material.
True: Lead time is the time gap between ordering and receiving of a raw material. It is the time required for the supplier to process and deliver the order to the establishment.
(iv) Bin card reflects the quantity and value of an ingredient held in stock at any given time.
True: Bin card is a record of the inventory levels of an ingredient held in stock at any given time. It reflects the quantity and value of the ingredient, as well as the date of receipt, issue, and balance of the ingredient.
(v) Request for credit memo is issued when a hotel wants to make credit purchases.
False: Request for credit memo is not issued when a hotel wants to make credit purchases. It is issued when there is a problem with the goods or services purchased, such as damaged or defective goods, incorrect pricing, or overcharges. A request for credit memo is used to request a credit from the supplier for the amount of the problem.
B Match the following:
(i) Stores ledger (a) Rotation of socks
(ii) Milk (b) Portion control
(iii) Rate of stock turnover (c) Standing order
(iv) ABC analysis (d) Cost of raw material
(v) Soup plate (e) Differential treatment of stock
Answers
(i) Stores ledger (e) Differential treatment of stock
(ii) Milk (d) Cost of raw material
(iii) Rate of stock turnover (a) Rotation of socks
(iv) ABC analysis (b) Portion control
(v) Soup plate (c) Standing order