5.O Demonstrate knowledge and understanding of purchasing and cost

control

5.1.1 Control Housekeeping Inventories

To control Housekeeping Inventories, FIFO and LIFO Methodes are accounting techniques used in managing inventory and and financial matters involving the amount of money a company has tried up within inventory of produced goods, raw materials, parts, components, or feed

stock.

a. First in First Out (FIFO):FIFO is the oldest inventory items are recorded as sold first but do

not necesserily mean that exact newest physical object has been track and sold

b. Last in First Out (LIFO):LIFO is the most recently produced item are recorded as sold first.

A LIFO inventory system can lead to LIFO liquidation, a situation where in the absence of new replacement inventory or a search for increased

profit, older inventory is increasingly liquidated ( sold or used )

5.1.2 Identify Purchasing and Cost

Control Business or organization attempting for acquiring good or service to

accomplish the goal of the organization.a. Function of Purchasing:

Procure a certain material or item, the material has to be the best buy at the right price.

Re-evaluated of performance, durability and sustainability to determine something better in a new market.

Have different procedure for processing and approving purchases, the evaluation that is needed for the housekeeping department.

b. 5 Principles of Purchasing:

Right Quality.

Right Quantity.

Right Price.

Right Time.

Right Source.

c. Stage in Purchasing:

1. Pre Order Stage.

2. Receipt Of Purchasing Indent.

3. Floating Of Enquiries.

4. Procurement Of Samples For Approval.

5. Quatation and Ordering.

6. Issue Of Purchasing Order.

7. Confirmation Of Receipt Of Purchase Order.

8. Follow Up.

9. Dispatch Advice.

10. Payment.

11. Receipt Note.

d. Type of Purchasing:Formal buying / competitive bid buying:

- Formal quatation are invited from sellers against writtenspecifications for each item to be purchased.Wholesale buying:-Contract is signed with a wholesaler for the purchase of items at aspecific price for a future periods along with the quantities requiredand when.Negotiated buying:

-Negotiations between the buyer and seller regarding prices andquantities.Contract purchasing / System contract:

-The contract assists the buyer and seller to improve the re-ordering ofitems that are repeatdly called for with minimal administrativeexpenses.

5.1.4 Establish and Implement Stock

Control System.The term of inventory refers to the stocks of purchased operating supplies, equipment, and other item held for furture used in housekeeping operations.