SITXINV005 Report: Establishing Stock and Purchasing Control Systems

This report, prepared for the SITXINV005 assessment, outlines the establishment of a stock purchasing and control system within a 5-star hotel. As the newly appointed manager of the purchasing department, the report details a four-week plan to implement effective stock management practices. It covers the determination of stock requirements, emphasizing the calculation of maximum lead time and minimum inventory levels to ensure adequate stock levels. The report also addresses establishing optimum supply arrangements through collaboration in supply chain management, fostering partnerships with key suppliers, and investing in robust infrastructure. Finally, it details the development and implementation of stock control systems, including the review of stock levels, the establishment of stock control policies, and the calculation of stock turn rates to improve efficiency and reduce costs. The report emphasizes the importance of accurate record-keeping, financial policy adherence, and negotiation with suppliers to achieve optimal stock management.

Running head: DISCUSSION OF DIPLOMA IN HOSPITALITY
Discussion of Diploma in hospitality
Name of the Student:
Name of the University:
Author Note:

1DISCUSSION OF DIPLOMA IN HOSPITALITY
1. Stock purchasing and control organisation.
As a manger of a five star hotel, the stock of the organisation can be
managed with the help of effective costs reduction and rise in the sales. In order
to establish a proper stock purchasing and control organization, there needs to be
a proper estimation cost of holding the stocks the few things that need to be kept
in mind are storing, coverage, keeping the records of accurate tracking and the
control of stock to avoid theft. The standard records must be updated and the
Financial Policies and Procedures must be ensured.1 The stock control policy and
the stock organisation to be established must make sure of the identification of
the stock and the process of buying the stocks must be tightened. Accurate stock
records must be maintained and they need to be matched with the regular physical
count. There should be proper negotiation of the deals with the suppliers and the
stock buying decisions must not be driven by any sort of discount prices. The
impact of the marketing and the promotion must be considered and the stock
policies must be reviewed. If the stocks move quickly, there will be more sales.2
Thus the customer delivery must also be considered. Finally the stock turn rate
must be calculated, in order to determining the sold good’s cost and determining
the cost of in hand stocks the stock purchasing organization must be established.
2. How to determine stock requirements?
In order to determine the stock requirements of any business organisation,
the maximum lead time must be calculated along with the minimum inventory
1 Geva, Tomer, and Jacob Zahavi. "Empirical evaluation of an automated intraday stock
recommendation system incorporating both market data and textual news." Decision support
systems 57 (2014): 212-223.
2 Liu, Chunling, et al. "Across-chain purchasing decision model and algorithm for cluster supply chain
under limited over-stock contract." Comput. Integr. Manuf. Syst 19 (2013): 1115-1126.

2DISCUSSION OF DIPLOMA IN HOSPITALITY
level.3 The maximum lead time in a week must be multiplied with the maximum
usage per week. This will help to reach the minimum inventory level. This
determine the requirements of the stocks. When the inventory falls, that amount
of stock is required for the organization to purchase can be determined.
3. How to establish optimum supply arrangements
There needs to be a collaboration in the supply chain management in
order to establish optimum supply arrangements. There needs to be a
collaboration between the companies like joint initiatives. The companies must
collaborate with the largest suppliers or customers in order to greatest value.
There is great value in collaborating with the partners who are equally capable,
have goals related to strategic goals and potentials of values. The partner in the
business must have the right infrastructure. It would help to improve the
forecasting. 4 Also the investment over accurate infrastructure and with the
correct pupil is essential for a fruitful supply chain arrangement. The accurate
management of performance system would help the company to ensure
productivity. In the collaborative effort of the supply chain, all participants must
use the similar system of performance management. The final and the most vital
ingredient is proper collaboration. The companies must have a perspective based
on long term plans along with collaboration of effort. The accurate understanding
capabilities and cost offer the most productive supply change arrangement. The
most important and the effective supply chain management involves the planning.
Planning follows the effective development. Developing and sourcing is very
3 Schweitzer, Michael, et al. "Methods and systems for distributing stock in a distribution network."
U.S. Patent No. 8,655,749. 18 Feb. 2014.
4 Handfield, Robert B., et al. "How can supply management really improve performance? A
knowledge‐based model of alignment capabilities." Journal of Supply Chain Management51.3 (2015):
3-17.

3DISCUSSION OF DIPLOMA IN HOSPITALITY
important. The third step in the management of supply chain is the manufacturing
and the making of products that are demanded by the customers. Delivering of
the products and proper return of the items are the final steps that are essential for
an effective supply chain arrangement.5
4. How to develop and implement stock control systems
The stock system of the organization can be developed using effective
stock control systems. The stock levels of the firms and the sales volume of the
stock items must be reviewed. The next procedure to implement proper stock
control systems are the establishment of stock control policies. The areas of the
business where the stock management creates an impact must be identified. And
finally the stock turn rate must be calculated for a better planning.6
5 Ross, David Frederick. Distribution Planning and control: managing in the era of supply chain
management. Springer, 2015.
6 Ruparathna, Rajeev, Kasun Hewage, and Rehan Sadiq. "Improving the energy efficiency of the
existing building stock: A critical review of commercial and institutional buildings." Renewable and
sustainable energy reviews 53 (2016): 1032-1045.

4DISCUSSION OF DIPLOMA IN HOSPITALITY
Works cited
Geva, Tomer, and Jacob Zahavi. "Empirical evaluation of an automated intraday stock
recommendation system incorporating both market data and textual news." Decision
support systems 57 (2014): 212-223.
Handfield, Robert B., et al. "How can supply management really improve performance? A
knowledge‐based model of alignment capabilities." Journal of Supply Chain
Management51.3 (2015): 3-17.
Liu, Chunling, et al. "Across-chain purchasing decision model and algorithm for cluster
supply chain under limited over-stock contract." Comput. Integr. Manuf. Syst 19
(2013): 1115-1126.
Ross, David Frederick. Distribution Planning and control: managing in the era of supply
chain management. Springer, 2015.
Ruparathna, Rajeev, Kasun Hewage, and Rehan Sadiq. "Improving the energy efficiency of
the existing building stock: A critical review of commercial and institutional
buildings." Renewable and sustainable energy reviews 53 (2016): 1032-1045.
Schweitzer, Michael, et al. "Methods and systems for distributing stock in a distribution
network." U.S. Patent No. 8,655,749. 18 Feb. 2014.