Inventory Records Valerie Crouch, SNS Child Nutrition Program Consultant School and Community Nutrition Kentucky Dept. Of Education
Inventory Records are used to: • Provide information regarding food and supplies in stock. • Determine purchasing needs. • Provide data for food cost control. • Control theft and pilferage.
Inventory Control The first step to good inventory control is a system of counting inventory. The two systems of counting inventory are perpetual and physical. With a perpetual inventory a physical inventory is still necessary, but a physical inventory can be kept without a perpetual.
Perpetual Inventory • Perpetual inventory requires updating the balance on hand by adding each item received on the invoice and subtracting the count of items issued from storeroom. • At any given time the balance on hand should be the amount in inventory. • Perpetual inventory is an excellent way to use inventory levels when planning purchases. Item numbers can be added with product name for referencing when ordering. • The accuracy of the perpetual inventory should be checked at least monthly by taking a physical inventory of all items.
Physical Inventory • Physical Inventory is the process of physically counting the entire inventory. You can use the optional D-6 form or develop a physical inventory form based on the market order form and the physical layout of the storeroom. • Determine a standard procedure to count broken cases. Recommendation: Count by can, and/or by piece (for whole turkeys or hams). • A physical inventory should be taken prior to placing orders.
Commodity vs. Purchased Food Inventory A separate inventory for commodities is not required. Treat commodities like other foods you purchase, store, and use.
D-5 • Full purchase price (not NOI discounted price) is recorded on the inventory and on the D-5 in Column C. • For brown box delivery, record FMV (purchase price from your current bid) on the inventory report fair market value in Column C. • Column J is no longer used on the D-5.
D-6 • At the bottom of the D-6 form is the equation used to calculate the value of food and milk used monthly. • Each site will need to complete the equation monthly.
Calculation to Arrive at Value of Food and Milk Used K. Beginning Inventory - ending inventory from the month prior. (plus) L. Purchased food and milk received – Total of Column C from the D-5. (equals) M. Value of Food Available for that site for during the month. (minus) N. Ending inventory – the value on the last day of the month. (add or minus) • Adjustments to Inventory – Any increase/decrease in the inventorydue to, for example, loss of food by theft/spoilage or transferring food from one school to another. (equals) P. Value of Food Used
Days and Turnover of Inventory One of the best ways of determining if the inventory is too high is to determine how many days of inventory are in stock or how many turnovers in inventory are occurring each month. Ideally there would not be any more in inventory at any one time than is needed before the next delivery. If there are weekly deliveries, no more than seven days of inventory are needed. To determine how many days of inventory are in stock, one must determine the average daily food costs and divide the dollar value of the ending inventory by the average daily food costs. To determine the number of inventory turnovers, it is necessary to divide the average number of days in a month open for business by the number of days in inventory.
References Inventory Management for Child Nutrition Programs, NFSMI Controlling Costs in the Food Service Industry, Dorothy Pannell-Martin