Stock management

OBJECTIVE

To keep stock level at the minimum possible without compromising the hotel operations and allow efficient control over stock replenishment

POLICY

1. A minimum and maximum par level should be set in all storage areas for beverage, dry foods and general items

2. All par levels will need to be recorded, adhered to, and reviewed periodically.

PROCEDURE

1. A minimum and maximum par stock level should be established for all items kept in store in order to keep inventory at the lowest possible level sufficient for continuous consumption. The par-stock is based on the following concepts:

- Safety stock: the calculated minimum quantity considered necessary to satisfy demand during the requisition, purchase and receipt cycle for replenishing the item.

- Economic Order Quantity: the calculated reorder quantity that result in the lowest total cost for procurement and possession, with procurement costs comprised of administrative and handling costs such as solicitation, requisition, purchase, receipt, handling, storage and payment, and possession costs stated as a percentage of the quantity purchased based on obsolescence, interest, storage costs and other overhead items.

2. When ordering new items to be put in store for permanent use, par-stock level should be determined by the related department head, Purchasing Manager and Storekeeper, considering the followings:

- Actual consumption of similar goods over a fixed period of time in the past (for replacement items) and/or expected demand (for new products)

- Purchasing lead time

- Total value of the purchase, minimum quantity per order, maximum period that goods can be stored, storage space, etc…

Once defined, a list of minimum/maximum par-stock levels per item must be established and distributed to the Storekeeper, purchasing staff and Cost Controller.

3. Each day, the inventory file should be reviewed on a line-by-line basis by the Storekeeper to determine the items that have reached the reorder point. A store purchase requisition will then be prepared and order placed accordingly.

For strict and easy follow-up, detail of the minimum/maximum par stock level should be clearly stated on the store purchase requisition. The par-stock level should be reviewed periodically, at least once every six months, based on past consumption record, future plans and purchasing lead time.