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Lecture Purchasing: Selection and procurement for the hospitality industry (8th edition): Chapter 10 - Feinstein, Stefanelli
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Lecture Purchasing: Selection and procurement for the hospitality industry (8th edition): Chapter 10 - Feinstein, Stefanelli
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Chapter 10 - The optimal price. After completing this chapter, students will be able to: Explain how purchase prices influence buyers, describe how suppliers determine their purchase prices, identify methods buyers employ to reduce purchase prices,. | The Optimal Price 10 No Content adjustments, just graphical and font adjustments for readability. YOU SHOULD BE ABLE TO: Explain how purchase prices influence buyers. Describe how suppliers determine their purchase prices. Identify methods buyers employ to reduce purchase prices. YOU SHOULD BE ABLE TO (CONT.): Calculate cost information, including edible portion cost, servable portion cost, and standard cost. Evaluate qualitative aspects of a potential opportunity buy. WHAT IS THE OPTIMAL PRICE? The optimal price is the price that, when combined with optimal quality and supplier services, produces the optimal value. It represents the lowest possible EP cost consistent with the optimal value of the product. EP COST CALCULATION EP cost = AP price ÷ edible yield percentage HOW DO ATTITUDES AFFECT THE PURCHASING PROCESS? Novice buyers overrate AP prices Price normally follows quality Derived demand Sometimes price is secondary Requesting itemized bills A particular product represents | The Optimal Price 10 No Content adjustments, just graphical and font adjustments for readability. YOU SHOULD BE ABLE TO: Explain how purchase prices influence buyers. Describe how suppliers determine their purchase prices. Identify methods buyers employ to reduce purchase prices. YOU SHOULD BE ABLE TO (CONT.): Calculate cost information, including edible portion cost, servable portion cost, and standard cost. Evaluate qualitative aspects of a potential opportunity buy. WHAT IS THE OPTIMAL PRICE? The optimal price is the price that, when combined with optimal quality and supplier services, produces the optimal value. It represents the lowest possible EP cost consistent with the optimal value of the product. EP COST CALCULATION EP cost = AP price ÷ edible yield percentage HOW DO ATTITUDES AFFECT THE PURCHASING PROCESS? Novice buyers overrate AP prices Price normally follows quality Derived demand Sometimes price is secondary Requesting itemized bills A particular product represents a huge expense Tight materials budget HOW ARE AP PRICES DETERMINED? A function of the suppliers cost A function of supply and demand A function of competitive pressure Buyer pricing WAYS TO REDUCE AP PRICE Make or buy analysis Provide your own supplier services Provide your own economic values Shop around Lower your quality standard Blanket orders on miscellaneous items Improved negotiations Substitutions WAYS TO REDUCE AP PRICE (CONT) Cash Discounts Hedging Economical packaging Odd-hours deliveries Co-op purchasing Cost-plus purchasing WAYS TO REDUCE AP PRICE (CONT.) Promotional discount Exchange bartering Introductory offers Reevaluate EP cost Calculate PF, PD, and EP costs Opportunity buys Evaluate their benefits OPPORTUNITY BUYS Rules for taking the opportunity Purchase in large quantity Pay in advance or on delivery Buyers must analyze true costs Quantitative analysis Qualitative analysis
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