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This is to certify that the

thesis entitled
Silo \ 6,15 tczice 911.0: 1?.“ In PTOCCET‘LI‘PS

of Selected Federal 225 State

‘

L .+_ . .2 " ...' '
I..ct i was on LLCJLjr‘n

presented by

has been accepted towards fulfillment
of the requirements for

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“Major professor

 

Date A‘_"‘ngt I} v '1 C277 I:

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H

15

\
SUBssy

l

Erna

 

SUBSISTENCE PURCHASING PROCEDURES OF SELECTED

FEDERAL AND STATE INSTITUTIONS IN MICHIGAN

BY

BETTY MARIE KETCHAM

 

A. THESIS

Submitted to the School of Graduate Studies of Michigan
State College of Agriculture and Applied Science
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE

Department of Institution Administration

\_.

1955 ,7

"'HHSYF?

 

H05

39;

u-n .
I'IL.‘

ABSTRACT

The purpose of this study was to survey the subsistence pur—
chasing procedures in four well organized institutions in order to pro—
1'vide practical purchasing information for the food service manager
interested in centralized purchasing.

The institutions selected for this study included Ypsilanti State
HOSpital in Ypsilanti, Michigan; Veterans Administration HosPital near
Battle Creek, Michigan; University of Michigan in Ann Arbor, Mich-
igan; and Michigan State College in East Lansing, Michigan.

Subsistence expenditures represent the largest single cost of
a food service organization, therefore, the various factors which con—
trol these expenditures were investigated. These factors included
general information, physical facilities, allocation of space, organiza-
tion of purchasing department, training of key personnel, purchasing
procedures, receiving of supplies, storage of supplies, and issue of
supplies.

Certain steps are essential to all purchasing procedures and
follow a common pattern. The various institutions studied altered

this pattern to meet their specific needs and problems.

ii

358101

 

ties

proc

11a:

arr
a

C8!

of

There was little basis for comparison of the physical facili-
ties, however the location of the institution determined the buying
procedures for fresh produce. The large, opern storage areas, easy
transportation, and interior construction which required a minimum
amount of maintenance allowed Michigan State College to operate a
centralized purchasing program efficiently with a minimum number
of employees.

The departmental organization of the institutions showed little
similarity; on the other hand, key positions in these institutions were
occupied by men who had given at least twenty years of service to
the organization.

Requisitions were used by all the institutions in the survey to
initiate the buying procedure. The quantity of the supplies ordered
by the state and federal institutions was controlled by a standard
ration pattern.

The majority of the purchases made at the state and federal
hospital were by formal competitive bid. The two educational institu-
tions relied upon the open market buying procedures.

Purchase orders were used by all institutions in the study and
copies were forwarded to the units responsible for receiving the sup-
plies. All institutions except the University of Michigan used a

standard invoice -vouche r fo rm.

iii

 

which (1.
brokers
Food 8‘

dors 0

werfiie
additi
dank

V
4

Phys

ca:
“'1:

an

Food Stores at Michigan State College was the only institution
which did not use written specifications, but the regular vendors and
brokers were aware of the high quality of merchandise required by
Food Stores. All institutions used federal grades to inform the ven-
dors of the quality of supplies acceptable to them.

Perpetual inventories were maintained by all institutions and
verified by yearly, quarterly, or bi-monthly physical inventories. In
addition, the institutions maintained various procedures to prevent
daily discrepancies between the perpetual inventory and the actual
physical inventory.

Subsistence supplies were weighed, measured or counted, and
carefully inspected at all institutions to verify quantity and quality
with the purchase order. The responsibility for receiving, storing,

and issuing varied at all institutions.

iv

ACKNOWLEDGMENTS

The author wishes to express thanks to the Business Manager
and the Assistant Business Manager at Ypsilanti State HosPital; the
Food Buyer for the State of Michigan; the Chief of the Supply Division,
Chief of Procurement, and Chief of the Dietetic Service at the Veter-
ans Administration Hospital near Battle Creek, Michigan; the Business
Manager and Food Buyer at the Food Service building, University of
Michigan; and the Manager and Head of the Staples Department at
Food Stores building, Michigan State College, for their cooperation
in furnishing the data for this study.

The author also wishes to express her sincere appreciation
to Professor Katherine Hart for her guidance and encouragement in
the preparation of this material and to Dr. Pearl Aldrich for her

constructive criticism and advice.

TABL E OF CONT ENTS

Physical Layout of Purchasing Facilities ...........

Organization of Purchasing Department .............

Experience and Training of Key Personnel ..........

Pu rchasing P rocedure s

R e qui sitions ......

Methods of procurement .....................

Purchase order . . .
Material Management .
Standardization . . . .
Specifications .....
Stock levels ......
Inventories ......
Receiving .......
Storing .........
Issuing .........

METHOD OF PROCEDURE

J

vi

10

12.

12

13

15

16

16

23

2.6

26

29

31

33

35

 

lnstitutioné
The Interval
DISCUSSION .
Ypsilanti 8‘
Ph)’ Sic a
Pu rcha'

Mate ri

VEterans

M

Mic}

SIN,
.VL
LIT]

A39,

Institutions Selected for Survey .................. 35
The Interview ............................. g. 35
DISCUSSION .................................. 37
Ypsilanti State Hospital ........................ 38
Physical facilities and departmental organization . . . . 40
Purchasing procedures ...................... 45
Material management ....................... 50
Veterans Administration Hospital ................. 55
Physical facilities and departmental organization . . . . 57
Purchasing procedures ...................... 63
Material management ....................... 70
University of Michigan ........................ 76
Physical facilities and departmental organization . . . . 78
Purchasing procedures ...................... 85
Material management ....................... 90
Michigan State College ........................ 97
Physical facilities and departmental organization . . . . 98
Purchasing procedure ....................... 105
Material management ....................... 110
SUMMARY ................................... 115
LITERATURE CITED ........................... 125
APPENDIX .................................. 132

vii

 

Figure

LI,

Figure

LIST OF FIGURES

Organization of the State Purchasing

Division, Lansing, Michigan ...............

Organization of the Office of the
HosPital Business Manager, Ypsilanti

State Hospital ........................

Relationship of Subsistence Purchasing
Procedures and Material Management at
Ypsilanti State Hospital and the State

Purchasing Division ....................

Organization of the Veterans Adminis-
tration Department of Medicine and

Surgery .............................

Organization of the Supply Division,
Veterans Administration Hospital,

Battle Creek, Michigan ..................

Relationship of Subsistence Purchasing
Procedures and Material Management,
Veterans Administration Hospital,

Battle C reek, Michigan ..................

Organization of Service Enterprises,

University of Michigan ..................

Organization of the Food Service Building,

Unive rsity of Michigan ..................

Relationship of Subsistence Purchasing
Procedures and Material Management,
Food Service Building, University of

Michigan ............................

viii

Page

42

44

46

6O

61

64

82

83

86

Figure

10.

ll.

12.

13.

14.

15.

16.

Organization of the Department of
Dormitories and Food Services,

Page

Michigan State College ................. 102
Organization of the Food Stores

Building, Michigan State College .......... 103
Relationship of Subsistence Purchasing

Procedures and Material Management,

Food Stores Building, Michigan State

College ............................. 106
Questionnaire ........................ l 33
Instructions to Bidders, State Purchasing

Division, Lansing, Michigan .................. pocket
Instructions to Bidders, Veterans Ad-

ministration Hospital, Battle Creek,

Michigan ............................... pocket
Market Grades Acceptable to the

Individual Institutions ................... 140

ix

INTRODUCTION

Subsistence expenditures represent the largest single cost of
a food service organization. In 1951 college and university food ser-
vice units Spent over $150,000,000.00 for food products and hosPitals
over $408,000,000.00. Purchasing control for the single unit food
service organization is relatively simple, but multiple unit food ser-
vice operations present a more complicated problem. With central-
ized purchasing, standardization is facilitated, lower prices are ob-
tained, and the buying is in the hands of experts.

The legal restrictions imposed on government purchasing cre-
ate a rigid framework within which the food buyer operates. Semi-
commercial operations have a latitude almost unlimited by law for
developing purchasing procedures. They may select any vendor who
meets their demands, establish purchasing policies and procedures,
modify specifications, change the methods of in5pection, and otherwise
direct purchasing activities in any manner that seems expendient.
For government agencies, the rigidity of purchasing procedures is
based on restrictions imposed by laws and regulations to insure
economy in the expenditure of public funds and to protect the legiti-

mate and reputable business man.

In addition to the efficient organization and operation of his
department, the food buyer must have accurate information about the
items he procures. The seller of today supplies pertinent informa-
tion to the buyer who must know the quality of merchandise desired
by his organization and how to interpret these qualities to the vendors.
After surveying the various methods of procurement, he selects those
procedures which will most economically serve his individual require-
ments.

Full value for dollar spent is determined by the selection of
proper quality and quantity of merchandise, accurate descriptions, and
careful inspection of delivered goods. The importance of proper in-
sPection of food products is often overlooked, and poor quality and
incorrect quantities are accepted as a result. Supplies should be
received by a person who recognizes quality and is familiar with
established requirements. Care must be exercised in storage to
maintain the. quality of merchandise until final delivery to the pro-
duction units. In order to control stock and to obtain a. daily food
cost, withdrawals from the warehouse must be carefully regulated
and perpetual inventories periodically checked by physical inven-
tories.

This study was made to survey the subsistence purchasing

procedures of the following federal and state institutions: Michigan

State College, University of Michigan, Ypsilanti State Hospital, and
the Veterans Administration Hospital located near Battle Creek, Mich-
igan. A summary of the procedures used by these well organized
institutions should provide practical purchasing information for the

food service manager interested in centralized purchasing.

R EVIEW OF LIT ERAT UR E

The basic principles of sound buying are well established and
widely accepted. For efficient operation these principles must be
adapted to the specific requirements of an organization. A review
of departmental structures, purchasing procedures, and material man-

agement is essential to the interpretation of these variations.

Physical Layout of Purchasing Facilities

The physical arrangement of the purchasing office depends
upon the space available. Heinritz (23) stated that the purchasing of-
fice should be a part of the general office organization and should
be located near the entrance of the building. The National Associa-
tion of Purchasing Agents (49) suggested that in large departments the
buyers concerned with related commodities be grouped to implement
greater flexibility of work. In the opinion of Heinritz (23) the gen-
eral office facilities that buyers use with frequency should be located
adjacent to the buying section. The National Association of Purchas-
ing Agents (49) stressed that the clerical and filing operations for
the purchasing department should be kept as a unit in the general
Office unless the department was segregated because of size.

4

In addition to the mechanics of purchasing, Space must be
available for the receipt and storage of goods. NorthrOp (51) stated
that the receiving area should consist of a receiving platform, adja-
cent space where goods could be examined and invoices checked, and
an office for the receiving clerk. The receiving room should be dis-
tinct from the outside platform and be equipped with platform and
beam scales. The truck zone of the receiving area should be acces-
sible to all types of vehicles and located on a rear driveway or
alley. Dana (12) emphasized that the larger establishments needed
sufficient parking space to accommodate several delivery trucks at
one time. According to Northrop (51), the receiving platform must
be at least eight feet wide and long enough to permit the simultane—
ous unloading of several trucks. Dana (12) noted that cartons which
were stacked on skids when they were received could be stored eas-
ily without additional handling. The author further stated that plat—

form and hand trucks were essential in the efficient receiving and
Storing of produce.
In a discussion of freight transportation methods Heinritz (23)
Pointed out that a freight elevator should be large enough to handle
the average platform truck. He suggested that the size of the ele—

v"3-130r be increased if it was to be used by other departments and

served all floors of the building. Gravity conveyors could be profit-
ably employed where large quantities of case goods were handled.
Dahl (15) suggested that goods could be sent directly into the stor-
age areas by use of conveyor systems.

Dana (12) discussed Space allotment for storage on the basis
of a three-day stock level for perishable food and a thirty—day stock
level for staple goods. Dukas (16) studied the problem of allocating
space to the Specialized departments within different types of mass
feeding units and found that no single ratio could be considered re-
liable in allocating floor Space to a department. Northrup (51) noted
that the number of departments served, the location of the institution,
the purchasing policy, and the plans for exPansion played an impor-
tant role in determining the size of the areas assigned for storage.

In the Opinion of Dana (12), the staple storeroom should be

located near the receiving area and in a logical line of routing to the
kitchen storage and preparation units. The author specified further
requirements for optimum storage Space as follows: number of exits
held to a minimum; doors through which the produce enters must be
dOLIble and should open into a wide corridor; doors and windows should
be locked; windows should be guarded with heavy mesh screening;

crOSs ventilation was essential; floor must be constructed to bear

additional weight of stacked cases and to withstand constant traffic
of heavily loaded trucks. Separate storage areas Should be assigned
for the storage of root vegetables and other fresh produce which do
not require refrigeration.

Northrop (52) stated that refrigerators might be located within
the food service department or under the control of the store'room.
If sufficient refrigerator storage was provided within the work units,
storage boxes could be kept locked and thus limit the frequency of
Opening. Space assigned for the storage of frozen foods should open

into refrigerated areas whenever possible.
Organization of Purchasing Department

Organization is an invisible framework through which the ef-
fort of various individuals is combined into effective teamwork. Ac-
cording to Jucius (28) the responsibility of the purchasing department

to some higher authority depended upon the organized policy of t0p
management. The National Association of Purchasing Agents (49)
reported that in the majority of cases the purchasing department re-
pol'ted to an authority which was reSponsible for the general policies
of the company. Spriegel (61) stated that the purchasing agent par-

ticiE>a.ted in the formulation of purchasing policies and assumed the

reSponsibility for communicating those policies to his subordinates.
The chief functions of the department, according to Heinritz (23),
were buying materials of the right quality, in the right quantity, at
the right time, at the right price, and from the right source.

The four recognized types of organization are: line or mili-
tary, functional, line and staff, and committee. Line or military
organization, in the opinion of Spriegel (61), referred to that type of
organization in which each perSon was responsible only to his imme-
diate superior. This type of organization is the oldest and the sim-
plest. Jucius (28) noted that the distinguishing feature of a functional
type organization was that each person, except those at the top level,
reported to several supervisors, each of whom was a specialist in

his own area. Line and staff organization has evolved as the best
all—around type of organizational structure. Jucius (28) claimed that
in this type of organization each employee reported to one supervisor
but also received specialized service and help from various eXperts.
These eXperts acted as advisors and counselors and had no direct
re s1:)0nsibility for operations. Spriegel (61) stated that committee
or8'a-l'iization was seldom used except when owners or directors de-
sired more time in which to select the person to whom they wished

to ell'ltrust leadership.

 

Heinritz (23) explained "that the buying and clerical division of
a purchasing department was adapted to a line organization in which

authority and reSponsibility for action were delegated by the purchas-

ing agent through one or more stages of subordinates. From the

standpoint of organization of the enterprise as a whole, Spriegel (61)
noted that the purchasing department was a staff department This
department performed the same function in relation to materials and

supplies that the personnel department performed pertaining to per-

3 onnel.

Heinritz (23) pointed out that various titles were used to indi-

cate the head of the purchasing department. The traditional title of

purchasing agent was used most generally. The author further em-

phasized:

There is a sound legal basis for retaining the traditional
designation. In law, a duly authorized agent is empowered to act
for his principle (in this case, for the company) with full author-
ity in respect to the duties which are assigned to him or are
customary in that capacity, and in such acts as are usual or
necessary in the performance of these duties. His title as pur-
chasing agent and his signature with that title on purchase orders
and contracts issued within his authority make such commitments
binding upon the company and enforceable in the courts. The use
of this title serves notice upon suppliers, and gives them assur-
ance, that the orders and contracts are official and binding upon
the company, which would not necessarily be the case with orders
Signed by other employees or even officers of the corporation not

having this particular authority assigned to them.

10
Heinritz (23) maintained that the clerical staff of the purchas-
ing department was important because of the large volume of paper
work necessary in the processing of requisitions and the maintenance
of records and reference files. West and Wood (68) suggested that
the charting of an organization to present graphically the interrela-
tion of parts to each other and to the whole was a valuable means of
checking validity and clarifying existing relationships for the person-

nel.
Experience and Training of Key Personnel

Lewis (31) stated that the position of purchasing executive
required a type of personnel with training, experience, and personal
qualities unlike those needed for other executive positions. Good

procurement was seldom achieved by those whose primary interests,
training, and reSponsibilities (were in other areas.

Heinritz (23) listed the following qualifications for purchasing

executives:

1. Knowledge of materials and products which enable the
purchasing agent to select the proper item and quality
for the intended use.

2. Knowledge of accounting procedures, costs, economics,

production management, and business law.

 

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11
3. Knowledge of administration in order to formulate policies,
and to establish efficient procedures coordinated with those
of other departments; and direct the work of the depart-
ment according to this plan.

4. Ability to be analytical, objective, fair, research-minded,

and resourceful.

According to Civil Service Examination for Purchasing Officer

(6), applicants for the position must have had a designated number of
years of general and specialized experience. Studies successfully
completed in an accredited college or university could be substituted
for the required general experience at the rate of one year of college
study for nine months of experience.

Heinritz (23) stated that specialized courses of study and train-
ing for purchasing were offered in many college and university exten—
51011 programs. In addition, the author emphasizes that purchasing

was a function that was largely learned ”on the job” and progressive
Company training courses have made provisions for this essential
Step. He commented that the clerical activities of the purchasing
department were exceedingly important and necessitated a high degree

of accuracy, understanding, judgment, and promptness.

12

Purchasing Procedure 5

Because the need for purchasing arises from the requirements
of an operation, the first essential in a purchasing program is estab-
lishing a method of notifying the buyer of these requirements. Be-
fore a purchase order is issued, sources of supply must be selected

and negotiations for the most advantageous purchase must be made.

R e qui sitions

 

Heinritz (23) defined a requisition as the form which set the
purchasing process in motion by notifying the purchasing agent of the
requirements of the department and by giving him the authorization
to buy. The requisition is generally a simple form prepared in dupli-
cate so that the carbon copy could be retained as a record in the de—

partment initiating the request. The original was forwarded to the
purchasing office. The author indicated that in some companies two
forms of requisitions were used a stores requisition on the stores
department for items that were normally carried in stock and a pur-
Chase requisition for items that were to be procured. Lewis (31)
Stallied that the purchasing agent could not be expected to buy for the
department that requested the supplies unless he knew exactly what

was wanted. Heinritz (23) suggested that the minimum information

 

13
required on any purchase requisition should include the date, a de-
scription of the material, the quantity needed, delivery date, and the

signature of the authorized agent.

Methods of procurement

 

In a discussion on sound purchasing policy, Heinritz (23) em-
phasized that competition be established by soliciting bids from two
or more satisfactory sources of supply. The author further stated
that the formal invitation of bids was not used when orders repre-
sented a very small expenditure or when the time element made it
impracticable. Lewis (31) stressed that purchasing on competitive
bids called for careful selection of dependable sources of supply.
The National Association of Purchasing Agents (49) and Heinritz (23)

emphasized that a list of Six or eight dependable sources of supply
should be maintained. In the opinion of Lewis (31), an accurately
Wo rded request for quotation should be submitted to a sufficient number
of Suppliers to assure a truly competitive price. Heinritz (23) ex-
Plained that although the request for quotations could be done by a
lette r, a special form was usually provided. These forms, according
to Frooman (21), should list the item to be purchased, a description

of the item, delivery date and point.

 

14
The last step in purchasing by competitive bid, according to
Heinritz (23), was the comparison of bids. Lewis (31) pointed out
that the lowest bid was customarily accepted. Heinritz (23) explained
that the buyer for private industry was not obligated to buy from the
lowest bidders. In government buying, the award was made to the
lowest responsible bidder. If there were several identical bids at
the low figure, the government buyer drew lots to make his decision.
Brodner and co-workers (7) stated that Open market buying
was used by at least 95 per cent of all commercial food operations.
Frooman (21) emphasized that this method was used exclusively by
at least 90 per cent of the commercial and institution food buyers
and was also used within prescribed limits by all public agencies and
institutions. Open market buying requires the requests of informal
quotations from one or more convenient sources of supply, and the
order is then placed on terms most advantageous to the buyer.
Present tendency, according to Heinritz (23), was distinctly
in the direction of procuring a greater number of items on a con—
tract basis. Lewis (31) emphasized the importance of buying ahead
for commodities which were marketing during a particular season.
Proffitt (55) explained the contracts that were used in pur-

\

chasing canned foods. A firm at opening price contract (FAOP)

15
indicated that the buyer signed an unpriced contract and agreed to
take the supplies at the price named by the packer when the pack was
in progress or completed. A subject approval of price contract (SAP)
was forwarded by the packer as soon as he obtained a reasonably ac-
curate estimate of the crop yield. These contracts gave the buyer an
option to buy a Specified quantity, subject to approval upon naming

of price.

Purchase orde r

 

A purchase order, according to Heinritz (23), was the form
that initiated the actual procurement of supplies. This form was
normally completed by a clerk in the purchasing office who tran-
scribed the data from the original requisition to the purchase order.
Lewis (31) emphasized that the placing of an order usually does and
always should involve the use of a purchase order. Legal complica-
tions may develop if the orders are not confirmed in writing.

Lewis (31) and Heinritz (23) agreed that there were certain
generally accepted essential requirements for a satisfactory purchase
order form. These were: the serial number, date of issue, name
and address of firm receiving the order, the quantity and description
of the items ordered, the date of delivery, shipping instructions, prices,

terms of payment, and conditions governing the order.

 

 

Comp ani;
i

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purchase orde r:
i

i
scribed a typicfi
i

the vendor, Son
by the vendor "1

receiving depar-

generally two C

The pur
making the pu:
define the 653
order Will ind
must be inspe
The Control a
are issued is

16
Companies differed widely both in the number of copies of a
purchase order issued and the method of handling. Lewis (31) de-
scribed a typical distribution of copies as follows: The original to
the vendor, sometimes accompanied by a duplicate copy to be returned
by the vendor as an acceptance; one copy to the requisitioning and
receiving department; another copy to the accounting department; and

generally two copies were retained in the purchasing department.

Mate rial Management

The purchasing responsibility goes beyond the single act of
making the purchase. A. buyer must standardize his requirements and
define the essential quality factors in such a manner that the purchase
order will indicate exactly what is required. The supplies delivered
must be insPected for quality and quantity before they are accepted.
The control and complete accountability for the materials until they
are issued is also an important responsibility of the purchasing de-

partment.

Standardization

 

Kitchen (30) maintained that standardization was essentially

an aid to orderly marketing and efficient buying and selling. The

17
need for standardization has developed with the commercialization
of American agriculture. As the Middle West was settled, vast
quantities of grain began moving long distances to the centers of
consumption. Without standards there was no intelligent basis on
which prices could be compared. To develop a common language for
trading purposes, systems of grading grain were adopted by state
governments, trade organizations, and boards of trade. Confusion
resulted because there was no way to maintain uniformity without
accepted authority to enforce rules or to compel the use of the
same standards in all markets.

Some of the earlier methods of standardization attempted by
the growers were discussed by Spangler (60). The variety of methods
included marking containers with the grower's name, grading on the
market by commission men, and grading at the country shipping point
by representatives of the buyers. Trade marks and brands were de-
veloped by some of the larger shipping and producing organizations.
This initial use of brand names did not prove to be successful.

The author outlined the development of Federal standardiza-
tion for fresh fruits and vegetables from the first appropriation of
funds for the study of marketing in 1907 to the status of Federal

grades in 1946.

1907

1912

1913

1915

1916

1917

1918

1920

1922

18
Congress appropriated funds to the Department of
Agriculture for the study of Federal standardization.
Sulzer Bill or the United States Apple Grading Law
was passed.
Congress appropriated funds for conducting studies in
the marketing of farm products. This was the authority
for conducting investigations for the establishment of
standards.
United States Standard Barrel Act was passed.
The Standard Container Act of 1916 made the use of
certain containers compulsory.
Food Products Act was passed which granted authority
to the Department of Agriculture to investigate and
certify to shippers the condition of produce when it
was received at the central markets.
Grades for potatoes became mandatory. Grades were
also recommended for strawberries and bermuda onions.
Grades were released for northern grown onions and
for sweet potatoes.
Congress granted authority to the Department of Agri-
culture to certify the quality and condition of fruits and

vegetables at shipping points.

19

1946 United States standards for 114 products were com-

pleted at this time.

The United States Department of Agriculture (54) defined the
three types of standards. A mandatory standard was an official stand-
ard, the use of which was compulsory in the conditions specified by
law under which that standard was promulgated. A permissive stand-
ard was a standard which had been worked out and recommended of-
ficially for optional use. A tentative standard was defined as a stand-
ard offered by the United States Department of Agriculture for use
under commercial conditions to test its practicability. A tentative
standard may later become a permissive or a mandatory standard,
according to the circumstances.

Viehamann (65) noted the following grades for farm produce.

1. Five United States grades have been established for butter:

U. 5. Grade AA (U. S. 93 score), U. 5. Grade A (U. S.
92 score), U. 5. Grade B (U. S. 90 score), and U. 5.
Grade C (U. S. 89 score).
2. United States grades have been developed for most of the
fresh fruits and vegetables: U. S. No. l and U. S. No. 2.
3. United States grades have been developed for processed

fruits and vegetables: U. S. Grade A U. 5. Grade B, and

20
U. 8. Grade C. Southerland and Linderer (59) explained
government inspection and grading of processed fruits and
vegetables.

4. The United States official grades established for beef are:
Prime, Choice, Good, Commercial, Utility, Cutter, and
Canner.

5. The United States official grades for veal, calf, lamb, and
mutton are: Prime, Choice, Good, Commercial, Utility
and Cull.

6. The United States standards for hog carcasses and cuts
have been developed: U. S. No. l, U. S. No. 2, U. S.

No. 3, and Cull are used to indicate quality.

7. The United States grades for eviscerated chicken are listed
as U. 5. Grade A, U. S. Grade B, and U. 8. Grade C.

8. The United States official grades for eggs: U. 5. Grade
AA, U. S. Grade A, U. S. Grade B, and U. S. Grade C.

A Check List of United States Department of Agriculture Stand-

ards for Farm Products (54) listed all the farm products for 'which
standards have been established. C0pies of these standards may be
obtained from the Production and Marketing Administration.

Janssen (27) pointed out that the formulation of definitions

and standards for food products has been an activity Sponsored by

21

the Food and Drug Administration. This Administration was respon-
sible for the enforcement of the Food, Drug and Cosmetic Act. Jan-
ssen further stated that three kinds of standards were established by
the Food, Drug and Cosmetic Act: standards of identity, standards
of quality, and standards of fill of containers. Definitions and Stand-
ards for Foods (20) contained the definitions and standards for foods
promulgated under the Federal Food, Drug and Cosmetic Act.

Reindollar (56) explained that the Bureau of Animal Industry,
under the Department of Agriculture, was reSponsible for the federal
meat inspection service and the grading of meat. The federal grade
stamp for meat denoted the quality and the federal inSpection stamp
certified that the animal was slaughtered under sanitary conditions
and was free from disease and that the carcass was wholesome when
the meat left the packing plant. Mohler (47) described the manner in
which the federal meat inSpection service operated. Bull (10) stated
that about 60 per cent of the meat sold was federally inspected and
that all meat which went into interstate commerce must have been
inspected.

In an address at a meeting of a Marketing Research Workshop
at Michigan State College, McCallister (41), Chief of the Technical

Programs Division of the Marketing and Facilities Research Branch,

22
emphasized that the policies behind a successful standardization pro-
gram should be based on recognized industry and consumer needs.
Using this plan, those responsible for developing standards established

a number of principles:

One of these principles is that the standards should be based on
the quality of the product actually produced and marketed. . . .
Today's standards when they are established, deal with all of

the marketable part of the cr0p, from the best to the poorest,
not just the top quality. Also, it has been learned that standards
for grades must provide for tolerances or allowances for the
various defects that show up under conditions of commercial
production and handling.

A second principle is that standards for grades must be designed
so that they will be as useful to as many members of the industry
and/or consumers as possible.

A third principle, that standards should reflect those commodity
characteristics that the buyers all through the marketing process
to the final consumer recognize and which influences the amount
which they are willing to pay.

The fourth, and very important principle, is that the standards
must be passed on factors that are practical to apply and still

be uniformly applied and dependable.

In a discussion of federal grading and inSpection, Spangler (60)
exPlained that federal inSpection at receiving points was conducted for
the purpose of enabling the shipper, the receiver, and other financially
interested parties to ascertain the condition of produce upon the ar-
rival in the markets. Spangler further stated that inspection of govern-

ment purchases was important for ascertaining whether or not dealers

delivered the quality of produce defined in the contract specifications.

23

Specifications

 

A Specification, according to the National Association of Pur-
chasing Agents (49), may be defined as a description of material to
be purchased. This description should be sufficiently accurate and
definite to insure receipt of the exact item wanted in a condition
which will allow its economical use for the intended purpose. The
United States government defined a specification as a statement of
particulars in specific terms.

Bryan (8), Wenzel (66), Mitchell (46), Wood (72), and Miller
(45) agreed that Specifications must be selected or compiled by each
buyer to fit the requirements of the particular situation. Brodner
and co-workers (7) emphasized that a specification was a tool which
must be selected with care and then used efficiently. They further
stated that specifications provided suitable buying standards for a
particular operation and that their use Should result in uniformity
and consistency in purchasing and receiving.

The National Association of Purchasing Agents (49) stated that
a satisfactory specification should be practicable, Simple, fair, flex-
ible, and definite, but that it Should not be more rigid than absolutely
necessary. They further explained that on many occasions buying

in accordance with Specifications was not necessary and that

24
specifications could never wholly replace the factor of reliability and
integrity of the vendor.

Frooman (21), referring to the procurement of canned fruit
and vegetable products, stressed that it was easy to obtain facts which
were needed for compiling specifications. The author emphasized the
importance of obtaining information about production of the various
food items and facts about available type, style, variety, grade, count,
product size, can size, net contents, drained weights, quality toler-
ances, major producing areas, and canning seasons. Wenzel (67)
discussed the method used to determine drained weights and other
pertinent information concerning processed fruits and vegetables.
Jacobs (25, 26), Wood (73, 74), Campbell (11), Dahl and co-worker
(l3), Todorff (64), and Logan (32, 35, 36, 37) furnished information
which would assist the food buyer in the compilation of Specifica-
tions. The American HOSPital Association Manual of Specifications
for Canned Fruits and Vegetables (1) presented general information
on the preparation of specifications and detailed material for Specific
canned fruit and vegetable items.

Wood (73) compiled buying guides for fresh fruits and vege—
tables. The market situation, the method of packing, standards and

grades, and suggestions for purchasing were included. Wenzel (67),

25
Logan (35, 36), Bemis and Seelig (4), and Schircliffe (58) discussed
various factors in the marketing and purchasing of fresh fruits and
vegetables. A Fruit and Vegetable Buying Guide (53), prepared by
the Production and Marketing Administration, gave a comprehensive
description of fresh fruits and vegetables. This guide included a table
which showed the shipping season of fresh fruits and vegetables
location. Information on Specific products has been prepared by com-
mercial organizations (3, 5, 19, 22, 24, 69).

In a discussion of meat buying guides, Wood (74) listed val-
uable information about types of meat, federal and packer grades,
methods of merchandising, recommended standards and grades, and
suggestions for purchasing. Bull (10), Logan (33, 34, 38, 39), Muellet
(48), and Wenzel (67) also supplied material on the purchase of meat.
Current information may be obtained from the National Livestock and
Meat Board (44), National Poultry and Egg Board, and meat packers.

The United States Department of Agriculture, cooperating with
the Army, Navy, and Veterans Administration, has prepared Specifi-
cations on all foods purchased by these agencies which may serve as

guides for the individual buyer in establishing his own purchasing

specifications .

26

Stock levels

 

The stock record card, as generally maintained by the stores
department, is concerned not with the source and price of materials
but with quantities. All receipts and disbursements are entered daily
to give a current total figure of the quantity in stock. Heinritz (23)
explained that visible type car‘d files were particularly adapted for
those records. The heading of each card required, in addition to the
description of the item, the maximum and minimum stock quantities,

ordering quantity, and the procurement cycle.

Inventories

 

Lewis (31) maintained that the ideal requirements ofan inven-
tory system were simplicity, flexibility, accuracy, and timeliness. The
basic requirements of an inventory control system as listed by Hein-
ritz (23) included:

1. Standard classification of items

2. Adequate storage and supervision of goods

3. Adequate records to substantiate receipt of material and

account for their disbursement

4. Accurate perpetual inventory record supported by periodi-

cal physical invento rie s

27

5. Established cost system

6. Analysis of inactive stores

Duncan (17) stated that the advantages of inventory control
were almost unlimited. This control system promoted standardiza—
tion, provided adequate protection and pr0per storage of supplies,
prevented over and under buying, and eliminated order duplication.

In a study of food cost control, McKinley (42) showed that
twenty-one out of twenty-seven college and university food service
units used a perpetual inventory for all or part of their food sup—
plies. The value of the perpetual inventory was also emphasized
by Brodner and co-workers (7), Bryan (9), and Schensul (57). From
a study conducted by the National Association of Purchasing Agents
(49), it appeared that the use of perpetual inventory systems increased
with the size of the organization. Heinritz (23) suggested the use of
a perpetual inventory card which furnished the following information:
name, description, unit, location in stores, maximum and minimum
stock quantities, ordering point, receipts, disbursements, and balance
on hand. He suggested the use of other cards on which additional
information on purchases, prices, vendors, and Specifications could
be maintained. Winger (71) and Macha (43) stated that the perpetual

inventory should be filed in the office of the person who purchased the

28
food. Lundberg and Kane (40) reported that in large food operations
the perpetual inventory was often maintained in the storeroom and in
the office of the manager. According to Lundberg and Kane (40)
these cards should Show identical balances at the end of the month.
The preferred method of maintaining a perpetual inventory was the
visible index card file, according to Duncan (l7), Heinritz (23), and
Winger (71).

Espersen (18) did not feel that the benefits derived from a per-
petual inventory were worth the time and effort expended. He be—
lieved that efficient stock control could be maintained by an accurate
physical inventory each month. West and Wood (68) stated that a
perpetual inventory might not be justified in a small organization.

Lundberg and Kane (40), Brodner and co-workers (7), West
and Wood (68), and Duncan (1?) advocated the use of monthly physical
inventories to check the card balances and emphasized that differences
between the physical and the perpetual inventory should be investi-
gated. Miller (45) suggested that the perpetual inventory be checked
routinely by a physical count whenever a stock item reached the
minimum count. Heinritz (23) advocated a fast turnover of inventory
because less working capital was required. However, the rate of

turnover must be balanced against the desirability of maintaining

Z9
adequate reserve stocks, of prudent forward coverage, and of eco-
nomical quantity purchasing. Heinritz (23) listed several methods of
pricing an inventory and each gave a somewhat different interpretation
of inventory value. The cost or market method was the simplest and
normally made use of the actual purchase cost. The other methods
were average costs, first-in-first-out, last-in-last-out, and standard
cost. Dahl (l4) emphasized that food inventories should be valued at

actual purchase cost.

Receiving

The value of intelligent purchasing can be obliterated by care—
less receiving procedures. There must be a clearly defined receiv-
ing program with an accurate check on the quantity and quality of
merchandise received. The National Association of Purchasing Agents
(50) reported that the size of the organization determined somewhat
the reSponsibility for the receipt of supplies. In the smaller pur-
chasing organizations, 61 per cent were completely or partially re-
sponsible for the receiving function. However, this percentage dropped
sharply as the size of the organization increased.

In the majority of the cases interviewed by the National As-

sociation of Purchasing Agents (49), the inspection for quality was

30
the responsibility of the receiving department. Heinritz (Z3) pointed
out that the receiving department should be given prior notice about
the eXpected arrival of goods through the use of a purchase order to
aid in the identification of all materials received. Macha (43) listed
the following steps to be used for checking quality: each item pur-
chased by weight should be counted; items purchased in cases should
be opened on a test basis to ascertain that the entire case contained
merchandise as labeled; weights and counts determined by the receiv-
ing clerk should be compared with the shipping ticket or purchase
order. Brodner and co-workers (7) and Whitefoot (70) stressed the
importance of disregarding shipping tags or packing slips and obtain-
ing the actual weight or count of an item.

Lewis (31) stated that the inspection for quality ranged from
a routine check of the package label to a complete laboratory test or
analysis. He further advised that merchandise purchased by brand
name might require an occasional inSpection, but a check on the re-
sults obtained by the using department might suffice. Merchandise
purchased on the basis of grades or samples should be checked for
compliance with the grade specified or the sample submitted. Prod-
ucts which were purchased on a specification basis required close

checking. The Army Food and Messing Manual (2) furnished valu-

able information for checking the fitness of foods.

31

Lewis (31) added that if the goods passed inSpection, they were
released to the using department; if they.fafled to meet the Specifica-
tions, several methods of rejection were open. Heinritz (23) listed
the following methods of rejection: outright rejection, return for re-
placement, technical or engineering adjustment, and price adjustment.
He advised that whenever adjustments were made, the vendor should
be promptly notified why the delivery was unsatisfactory. The nego-

tiations for adjustment were completed by the purchasing department.

Sto ring

Storage facilities are important in the determination of pur-
chasing policies. These facilities control the maximum quantities of
the item that may be ordered.‘ In order to save money through quan-
tity buying, institutions and implant restaurants are making ample
provision for warehousing a sizeable inventory. In the survey con-
ducted by the National Association of Purchasing Agents (50), it was
concluded that 60 per cent of the purchasing departments in the study
considered storage capacity as a substantial factor in the determina-
tion of buying policy.

Heinritz (23) mentioned that the responsibilities for storage

centered in a storekeeper and his staff. They were held accountable

32
for the orderly arrangement and care of materials, the maintenance
of records, and the dispersing of supplies. Limiting access to the
storage area only to authorized personnel seemed to be a standard
recommendation.

Any system of stores control is predicated on orderly storage
of materials and accounting for them while they are in storage. Ac-
cording to Dahl (15), there were two generally accepted methods of
storage: alphabetically or by group classification. Heinritz (23) sug-
gested that all quantities of a given item be kept together and each
item be stored in a specified location. Sufficient room must be left
between the aisles for the movement of hand and lift trucks. Goods
should be stacked on skids and not directly on the floor.

Dahl (15) and Brodner and co-workers (7) advocated separate
storage Space for the various food groups which required refrigera-
tion. Kir-Stimon (29) reported that many commission houses advised
a holding temperature of 40° F for fresh fruits and vegetables. The
author further stated that the temperature of the average meat cooler
should be kept between 30° F and 34° F. In addition, he related that
a combination of 34° F temperature and 85 per cent humidity with 50
to 60 cubic feet of air movement per minute gave a maximum of 2

per cent meat shrinkage per week.

33

Issuing

The disbursement of supplies is normally the responsibility of
the storeroom personnel. Dahl (15) and West and Wood (68) empha-
sized that requisitions signed by authorized personnel should be pre-
sented for all supplies removed from the storeroom. Dahl (15) listed
the following reasons for occurrence of shortages: allowing employees
other than storekeeper to fill the requisitions; delivering goods on oral
order; filling requisitions by guess rather than by actual count, weight
or measure; filling orders partially and not recording the exact amount
delivered or making credit memorandums for the missing goods; and
omitting records of credit for swells, leaks, and breakage.

Supplies should be issued during a specified time each day,
according to Brodner and co-workers (7). McKinley (42) and Brodner
and co-workers (7) agreed that issuing meat from the refrigerators
could be simplified by the use of a meat tag system. When the meat
was received a tag was attached which indicated the date, the vendor,
and the weight at the time of delivery. This method, according to
Brodner and co-workers (7), had several advantages:

1. Meat could be issued without a second weighing.

2. Delivery date of meat easily checked.

3.

34
Meat shrinkage during storage was allocated and, there-
fore, included in the daily food cost the day the meat

was issued.

METHOD OF PROCEDURE
Institutions Selected for Survey

The institutions selected for this study included Ypsilanti State
HOSpital in Ypsilanti, Michigan; Veterans Administration Hospital near
Battle Creek, Michigan; University of Michigan in Ann Arbor, Michi-
gan; and Michigan State College in East Lansing, Michigan. All insti-
tutions used a form of centralized purchasing and were located within

sixty-five miles of East Lansing.
The Interview

The methods used in collecting the information for this \survey
were the questionnaire and the personal interview. The questionnaire
was divided into eight sections: general information, physical facili-
ties, allocation of space, organization of purchasing department,
training of key personnel, purchasing procedures, receiving of sup-
plies, storage of supplies, and issue of supplies. A copy of the
questionnaire has been included in the Appendix. The interviewer

used the questionnaire as a guide to assist her in conducting the

interviews.

35

36
At Ypsilanti State HosPital the Business Manager and the As-
sistant Business Manager were interviewed. The State Food Buyer
in the Purchasing Division at Lansing was also contacted. The Chief
of the Dietetic Service, Chief of Supply Division, and Chief of Pro-
curement Section were interviewed at the Veterans Administration
HosPital near Battle Creek. At the University of Michigan the Man-
ager of the Food Service building and the Food Buyer were inter-
viewed. The Manager of the Food Stores building and the Head of
the Staples Department were interviewed at Michigan State College.
The information received was compiled into a written report
for each institution. The physical facilities and departmental organ-—
ization, purchasing procedures, and material management were dis-
cussed. Figures were presented to show the relationship of purchas-

ing procedures and material management in the four selected insti—

tutions.

DISCUSSION

Purchasing has no single most important factor, but instead it
is made up of a combination of procedures determined by the nature
of the business. Purchasing programs reflect the attitudes and poli-
cies of management. To operate most efficiently the procedures
must be adapted to the type of organization for which the purchasing
is done.

The location of the institution in relation to sources of supply
and transportation facilities is one of the determining factors in the
selection of a vendor and the frequency of delivery. Available stor—
age space at the institution is another controlling factor in the es-
tablishment of purchasing procedures. The food budget, type of
menu, and composition and number of clientele served determines
the quality and quantity of food purchased.

The purchasing responsibility goes beyond the single act of
making the purchase. It involves planning and scheduling, policy
decisions, research and selection for materials and sources of sup-
ply, issuing the order, inspection for quantity and quality of supplies
before acceptance, and the control of supplies after they have been

received.

37

38
Interviews with employees responsible for the procurement of
subsistence supplies at four selected institutions furnished informa-

tion for the study. The findings of each interview are reported sep-

arately.
Ypsilanti State Ho spit a1

Ypsilanti State Hospital located thirty-six miles from Detroit
is the largest state-operated institution for the mentally ill in Mich-
igan. The hospital is under the jurisdiction of the State Department
of Mental Health. At the time of this survey, three food production
units were serving 4,100 patients and 130 hosPital personnel. The
food service production level was constant because the patient census
seldom varied more than ten.

A Recommended Dietary Standard for Mental HosPitals in
Michigan had been distributed by the State Budget Division in 1949.
Food commodities were divided into seven classifications: milk
products; fruits, vegetables, and legumes; eggs; meat, fish, and
poultry; flour and cereals; fats and oils; sugar and miscellaneous
items. Serving portions which insured the adequate nutrition of the
patients and allowed the hospital to Operate within the food budget

were established within these groups. A per capita food report was

39
submitted monthly to the State Budget Division which compared the
actual food usage at the institution with the approved pattern.

A standard menu was served in all units. The hospital oper-
ated on a raw food cost of forty-eight cents per person per day. This
cost included an actual expenditure of forty-two cents and an alloca~
tion of six cents from the state for surplus commodities. During the
time of this study the following surplus commodities were available:

butter, canned beef, salad oil, dried skim milk, dried eggs, and pea-

nut butte r .

An 800 acre farm, operated by the hosPital, furnished the food
production units with two-thirds of the daily milk supply and all of
the pork carcass requirement. From May until October the farm
supplied the following commodities in season: radishes, green onions,
asparagus, lettuce, cucumbers, tomatoes, greens, green beans, peppers,
cabbage, sweet corn, beets, carrots, rutabagas, turnips, parsnips,
squash, strawberries, peaches, pears, grapes, and apples. Breads
and desserts, including ice cream, were produced by the central bak-

ery. The meat shop fabricated and portioned meat and meat products

for the hosPital kitchens.

40

Physical facilities and dep_artmental organization

Subsistence supplies for Ypsilanti State Hospital were procured
through the State Purchasing Division and the office of the Business
Manager at the hospital. The hospital warehouse included dry storage
and refrigerator space not only for Ypsilanti but for other state insti-
tutions.

The storage warehouse was a one-level building constructed
of concrete blocks and connected to three central kitchens by cov—
ered ramps. Supplies were delivered either by hand trucks or by
motorized vehicles. The basement area was allocated to storage
refrigerators: two for potatoes, three for farm produce, and one
each for dried fruits and vegetables, frozen produce, cheese and
fresh fruits, eggs and butter, and woolen blankets. The temperature
of each refrigerator was individually controlled and adjusted to meet
the specific storage need. The temperature of two refrigerators
could be lowered to -7° F, and this space was utilized for storage
of frozen meats.

The receiving area on the first floor included a loading plat-
form for three semi-trailers and for three railroad freight cars.
Overhead scales and platform scales facilitated accurate inSpection

and receiving of goods. The office of the Storekeeper was located

41
in the center of the first floor and was convenient to the receiving
dock and the issuing area.

The remainder of the space on the first floor was utilized
for the storage of staples, canned goods, and for two meat refriger-
ators. Approximately one-third of the storage area was reserved
for subsistence items and the remainder for the storage of other
supplies and equipment required for the hospital.

In 1949 the state legislature created the Department of Ad-
ministration which assumed the purchasing authority formerly vested
in the State Administrative Board and the Board of State Auditors.
Within this department a Purchasing Division was established and
became responsible for formulating and enforcing sound purchasing
policies and procedures. In Figure l the organization of the State
Purchasing Division is shown.

The State Food Buyer, one of seven buyers in the Procurement
Section of the Purchasing Division, had been employed by the state
for thirty-nine years and had served fifteen years as Food Buyer.
He was reSponsible for purchasing or contracting of all subsistence
supplies required by the food service departments in the state insti-
tutions. His duties and responsibilities were governed by state laws

and by methods and procedures approved by the State Controller.

42

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43

A food buyer trainee, assigned to assist the Food Buyer, was spe-
cifically reSponsible for purchasing macaroni, spaghetti, noodles,
ice cream, fountain supplies, dried fruits and vegetables, bakery
goods, and spices. The trainee had graduated from Michigan State
College in the School of Business Administration and had worked one
year for the Gibson Refrigerator Company. He had served in his
present position for approximately one year.

The HosPital Business Manager was reSponsible for all ser-
vices at the hospital other than medical and personnel. Authority
had been delegated to the respective Business Managers in the state
institutions to procure some subsistence items locally and to order
against state contracts. The organization of the office of the Hospital
Business Manager is shown in Figure 2. The Hospital Business Man-
ager had served in this capacity since the hospital opened in 1931.
He graduated from Michigan State College in Dairy Agriculture and
was an instructor in the dairy department. He also served as State
Farm Coordinator for the State Department of Agriculture.

The Assistant HosPital Business Manager was directly reSpon-
sible for the operation of the kitchens and the warehouse; consequently,
he procured the subsistence supplies needed by the hospital. In ad-

dition, he assisted the Business Manager in the performance of his

44

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45

duties. The Assistant Hospital Business Manager had occupied this

position for eight years. He graduated from Michigan State College

in Hotel Administration and subsequently served four years as Sales
Officer for the Army Quartermaster Corps.
The Hospital Storekeeper received, stored, and issued all sup-

plies and equipment used at the hospital. An Assistant Storekeeper

and four laborers assisted with the maintenance of the warehouse.
The Storekeeper had occupied his present position for two years.
Prior to that assignment, he served for twenty years in the ware-

house, half of that time as Assistant Storekeeper.

Purchasing procedures

The relationship of subsistence purchasing procedures and ma-

terial management at Ypsilanti State Hospital and the State Depart-

ment of Administration is presented in Figure 3. The HosPital Busi-

ness Manager initiated the purchasing procedures. An inter-department
purchase order was prepared to obtain supplies from the cannery at
Jackson Prison and from storage centers located at other state insti—

tutions. The departmental purchase order and contract release form

authorized vendors with state contracts to ship supplies to the hos-

pital. This form was also used to obtain supplies on the local market

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WV» V" fl.

DnPnRTLLLT 0F ADhlnIolnallcN

State Purchasinv Division

1}

Food Buyer

Consolidates Purchase Requisitions from
the state institutions.

Prepares Request for Quotation and for- ——4b
wards to qualified vendors. Sealed bids
squired for purchaSus wuich exceed
$2,000.00 and unsealed bids required for
purchases which total less than 42,000.00.

Opens, reads, and tabulates sealed bids
at a public hearing at Specified date

and time. Cuts samples and inspects
grading certificates for processed foodso
Indicates award on tabulation sheet.

Opens unsealed bids and indicates the
successful bidder on the tabulation
sheets, which are available for pub-
lic inSpection.

Awards made to lowest qualifiel bidder.
If lowest bid not accepted a written
eXplanation is submitted to the State
Administration Foard.

1.

Order driting Department

lrcpares seven copies of lurchase 0rder
and forwards original COpy and blank In-
voice-Voucher fornS'to Vendor. Forwards
aiiitional copies to the hood Buyer,
Accounting Division, and institution
requesting the supplies.

Accounting Division 1,

heceives Purchase Crder from purchase order
writing room, Invoice-Voucher from vendor,
and Delivery Report from institution. Com-
pares the above reports and authorizes pay-
ment if correct; otherwise, State Food Buyer
is notified of the discrepancy.

figure 3. Relationship of Purchasing Procedures and Laterial kanagexent,
Ypsilanti State Hospital, Ypsilanti, Lichigan.

Vendor

Completes Request for
duotation according to
printed instructions
and returns bid by
specified date and
tine.

Vendor

Delivers supplies indi-
cated on Purchase Order
to hOSpitcl warehouse

Prepares six copies of
Invoice-Voucher and for-
ward five to the Account-
ing Division of the De-
partment of Administra-
tion.

/

 

 

 

 

YPSILANTI STATE HObPITAL 47

——‘—' Office of the Business Lanagcr

Prepares Purchase trders for local, inter-departmental, and contract pur-
chases. Erepares Purchase E euuisitions for other subsistcnc Cc suppiies.
Quantities dete 1ined by previous usare, quantity on ha nd, and -ount re-
quired to meet ration pattern. uality established by rood Com.odity
standards for S'cpzrtner.t of .eztalrea101.

Foraarjs co: ies of Purchase Crder to hoSpital warehouse and kurdiasing
Division in lensing. Forwards iurchase Requisition to State Food Euycr.

Heepital Jarehouse

Receives, weighs, measures, or counts all supplies. Inspects
carefully to Verify quality of merchandise indie ted on Pur-
chase brier. Checks processed foods arainst government grad-
ing certificates supplied by State food Buyer.

//,/’.’r Prepares Receiving heport and forwards to hospital acCounting ofiice

if rurct.ase Order and necei'ing heport agree; oflieruise, Assistant
Eusiness Lanager is notified. He correct irregularity and forwards
a Complaint to the Vendor Report to the State Food Buyer.

Posts quantities received on warehouse inventory cards.

Stores supplies until Institution btores Requisition is submitted
by Dietitian. These requisitions are approved by assistant Eusi-
ness hanager.

Issues staple supplies weekly; meats, fresh produce, and dairy pro-
ducts daily. Leiucts quantity ordered from the inventory cards and
indicates this balance on the Institution Stores Requisition.

for NET 5 one copy oi Institution Stores neouisition with the delivery;
retains one copya and forwards one copy to the accounting office.

i

hospital Accounting Office

epares a Delivery heport 1rom.the information stated on Receiving
go orta nd posts quantity reocivcd on perpetual inventory earls.
raarris Delivery Ref ort to account Division, Depart:cx.t of admin-
str aticn.

Deducts quantity' requisitions 1 by hOSpital kitchen from the inven-

tory cards and compares balance on the cards with those indie: ted
on the Institution otores hequisition.

Figure 3. (continued)

48
valued in excess of twenty dollars. For example, fresh fruits and
vegetables were procured at the Detroit Terminal Market by an Ypsi-
lanti wholesale produce vendor. He purchased at the market price
and charged the hospital twenty-five cents per container for delivery
charges. An imprest cash purchase order, a combination purchase
order and invoice, was used for local purchases of less than twenty
dollars. The institution paid the bill from imprest cash and was
reimbursed monthly by the Lansing Purchasing Division

A purchase requisition was submitted to the Food Buyer in
Lansing for all other subsistence items needed by the hospital. Sup-
plies were requisitioned for an interval of one, three, six, or twelve
months. Food commodities had been divided into twelve groups, and
one group was ordered each month by all state institutions. This
spread the buying activity uniformly throughout the entire year.
Sugar, potatoes, and flour were the only commodities ordered when
needed. Quantities listed on the purchase requisitions were deter-
mined by previous usage, the quantity on hand, and the amount re-
quired to meet the standard dietary allowance for mental hospitals.

The Food Buyer consolidated the purchase requisitions from
the institutions and submitted a request for quotations to approved

vendors. The descriptions of the required commodities were taken

49
from the standard specifications which had been established for
mental hOSpitals. Specific instructions for bidders were printed on
the back of the request for quotation forms. (See Appendix Figure
14.)

All purchases made by the food buyer were on the basis of
competitive bids. Sealed bids were required for all purchases esti—
mated to exceed $2,000.00. Submission of quotations was required
according to a specified date and hour. At the indicated time, they
were opened, read, and tabulated at a public hearing. Bids for pur-
chases valued at less than $2,000.00 were returned by a specified
date, but a public opening was not held and results were not made
public until after the awards had been designated by the food buyer.
All bids were listed on a tabulation sheet according to product, ven-
dor, and price. The successful bidders were encircled in red and
these tabulation sheets were available for public inSpection. Awards
were made to the lowest reSponsible bidder. If the low bid was not
accepted, a written explanation was submitted to the State Administra-
tive Board. Preference was given to those commodities produced or
manufactured within the state if quality, price, availability, and usa-
bility were equal.

The order writing department prepared purchase orders from

the tabulation sheet and the quotation form of the successful bidder.

50

The order writing department retained one copy of the purchase or-
der and forwarded a c0py to the Food Buyer, vendor, and Accounting
Division. Three copies were submitted to the institution that requested
the commodity.

A blank invoice-voucher form accompanied the purchase order
which was sent to the vendor. The vendor prepared the form, re-
tained one copy, and forwarded five to the Accounting Division of
the Department of Administration. The invoice was compared with
the delivery report submitted from the hosPital and a copy of the

purchase order. If all were correct, payment was authorized.

Mate rial management

Food commodity standards for the mental hospitals in Michi-
gan had been established by a Food Committee which consisted of the
Business Managers from three state mental institutions, the Food
Buyer, representatives from the Department of Mental Health, and
the specification department. A c0py of these commodity standards
had been distributed to all state mental institutions. Each item was
assigned a number which corresponded to a specification card com-
pleted for each food commodity. These cards contained detailed

descriptions of the standard food item and were on file in the office

51

of the Business Manager at each state mental institution, the De-
partment of Mental Health, the Specification office, and the office of
the Food Buyer.

The following grades were used to indicate the quality of
items acceptable for the mental institutions in Michigan: U. S.
Grade 1 for fresh fruits and vegetables; U. 5. Choice, Fancy“, and
Extra Standard for canned fruits and vegetables, with the exception
of pineapple and blackberries; U. 8. Grade Good for veal carcass;
U. S. Grade Good for mutton carcass; U. S. Grade 1 for beef liver;
U. S. No. 2 for smoked hams; U. S. No. 2 for bacon; Michigan
Grade I for frankfurters and sausage; U. S. Grade A and B for
eggs; and U. 5. score 90 and 92 or higher for butter.

Government grading certificates and samples were required
for all canned fruits and vegetables. A copy of the grading certifi-
cates was sent to each institution which would receive a shipment
of the commodity: All meat was government inSpected and graded.
A copy of the purchase order was sent to the government meat in-
spector in charge of the area in which the vendor was located. Eggs
were inSpected by the United States Department of Agriculture and

the Michigan State Department of Agriculture. Cheese and butter

were also state inSpected.

52

A perpetual inventory was maintained for all subsistence items
by the hospital accounting office and the Hospital Storekeeper. The
inventory in the warehouse was based on the bin card system. A
card for each commodity was located at the storage point and listed
the amount received, the amount on hand, and the amount issued. In-
formation for posting on the perpetual inventory cards in the ware-
house was iobtained from the receiving report and the institution
stores requisition. The Hospital Storekeeper indicated the amount
on hand and the new balance on the stores requisition form as the
orders were filled. Employees in the accounting office compared
the balance on the perpetual inventory cards in the accounting office
with the balance stated on the institution stores requisition.

A physical inventory was taken once a year, and individual
items were spot checked whenever a discrepancy occurred between
the two perpetual inventories. Supplies purchased from the revolving
fund and stored in the hosPital warehouse were inventoried at the
end~of each month, and a written report was forwarded to the Food
Buyer in Lansing.

HOSpital equipment and supplies, including subsistence items,
were received by the HosPital Storekeeper and his assistant. A copy

of each purchase order was forwarded to the warehouse by the State

53
Food Buyer and the Business Manager. This form facilitated the
preparation of the receiving report.

When subsistence items were received, the HOSpital Store-
keeper prepared a receiving report. All subsistence items were
weighed, measured, or counted. Weights from shipping tags and
packing slips were disregarded, and the vendor was paid for the
exact quantity of the item delivered. Supplies were carefully checked
for evidence of the governmnent grading, the inSpection stamp on
meats, and compliance with the description on the purchase order.
The receiving report described the item delivered, indicated the
quantity delivered, the unit of delivery, the method of delivery, the
vendor, the number of the purchase order, and the new balance on
hand.

If the purchase order and the receiving report agreed, the
receiving report was submitted directly to the hosPital accounting
office. The Assistant Business Manager was notified if a discrep—
ancy occurred. Any irregularity was corrected at the station level
if possible, and a complaint-to-the-vendor form was initiated and
forwarded to the State Food Buyer.

The quantities listed on the receiving report were posted

on the perpetual inventory cards in the warehouse and in the

54
accounting office. The warehouse indicated the new balance for each
item on the receiving report before forwarding it to the accounting
office. A delivery report was prepared from the receiving report
and was submitted to the Accounting Division in Lansing. If this
office observed a discrepancy in the delivery report, the purchase
order, or the invoice-voucher, the problem was referred to the State
Food Buyer; otherwise, the voucher was authorized for payment.

Ypsilanti hospital was one of eight state institutions which
had been selected as a regional warehouse to serve other institu-
tions in the area. All items stored in the warehouse were under
the surveillance of the HOSpital Storekeeper. Items purchased from
the revolving fund and stored in the warehouse were the property
of the State Food Buyer until released to the respective state insti-
tutions.

The available floor space at the time of delivery determined
the storage arrangement. Large quantities of subsistence items were
stored on dunnage racks and small items and broken cases were
stored on shelves. The storage areas in the three central kitchens
were adequate to store supply of staples for one week.

Subsistence supplies were issued by the warehouse upon the

receipts of an institution stores requisition, filled out by the Dietitian

55

and approved by the Business Manager. A separate requisition was
used for each food commodity. The kitchens submitted a weekly
order for staples which was delivered at one time. Requisitions

for meats, fresh produce, and dairy products were submitted once

a week for daily deliveries of these commodities. The old balance,
the quantity ordered, and the new balance were noted on the arequisi-
tion, when the warehouse filled the orders from the institution stores
requisition. As each order was filled, the quantity ordered was de-
ducted from the warehouse inventory cards. A c0py of the institutions
stores requisition was sent with the order to the requisitioning unit.
One c0py was retained in the warehouse and one was forwarded to

the accounting office for posting on the perpetual inventory cards.
Veterans Administration H05pita1

The Veterans Administration HOSpital, located near Battle
Creek, Michiganiis one of the largest of the 170 hOSpitals under
the direction of the Department of Medicine and Surgery of the Vet-
erans Administration. The hospital had two food production units
and fifteen food service units. These units served approximately
2,000 male patient rations and 270 employee rations per day. This

total census was relatively stable with a variation of less than 1-1/2

per“ cent during the fiscal year of 1953.

56

In 1948 a study was conducted by the Department of Medicine
and Surgery in an attempt to eliminate the discrepancy in food costs
and nutritional values among the Veterans Administration hospitals.
As a result of this study a standard ration pattern was developed.

The standard ration pattern established a specific number of
ounces per ration of nine basic raw food classifications: green and
yellow vegetables; citrus fruits and tomatoes; potatoes, other vege-
tables and fruits; milk and milk products; meat, poultry, fish, and
eggs; bread, flour, and cereals; butter and fortified margarine; fats,
other than butter and margarine; and miscellaneous foods. Menus
planned in conformance with the standard ration pattern met all re-
quirements of the National Research Council Recommended Dietary
Allowances for physically active males. Supplementary allowances
were made to compensate for nutritional needs created by patho-
logical states, certain environmental conditions, and previous periods
of depletion. Veterans Administration officials credit this system
with reducing the Veterans Administration hosPital food bill in the
United States by $1,800,000.00 per year.

Food production for the Veterans Administration HOSpital
near Battle Creek was found to be well organized. Operational con-

trol was facilitated in a central kitchen. The food items served in

57
all units were identical and followed the standard menu pattern.
Standardized recipes were issued to the individual hospitals by the
central office of the dietetic service. These recipes were supple-
mented by recipes standardized in the individual units. The hosPital
bakery produced breads, rolls, pies, cakes, puddings, and ice cream.

A farm of 40 acres was operated by the hospital as an occu—
pational therapy measure for the patients. This farm supplied the
dietetic service with approximately 200,000 pounds of fruits and
vegetables and 120,000 pounds of pork each year. Additional sup-
plies were purchased from local markets and vendors in Detroit

and Chicago.
Physical facilities and departmental organization

The physical facilities of the purchasing department included
storage and refrigeration Space at the hospital and storage Space at
the supply depot. Supplies for the Veterans Administration hospitals
were obtained through the central office and the individual stations.
Three supply depots have been established to receive, store, and
issue the standard items of subsistence, maintenance, and equipment
that were procured by the central office. The supply depot in Hines,

Illinois, served the Veterans Administration installations in the twenty—

four Midwestern states.

an

58

This depot covered 10 acres of ground. Supplies were received
and delivered by railroad and truck. Three railroad spurs served the
depot and a large loading platform was available for trucks. The
need for refrigerated Space at the depot was small. Only a limited
inventory of dried fruits was stored in the refrigerators because the
supply depot in Wilmington, California, stored dried fruits for all
depots. The supply depot stocked approximately 250 staple subsis-
tence items which included canned fruits, vegetables, meat and fish,
vegetable and fruit juices, condiments, dried fruits, sugar, dried peas
and beans, flour, evaporated milk, dry Skim milk solids, rice, noodles,
macaroni and spaghetti.

When the subsistence supplies from the depot were received
at the hospital they were stored in the subsistence warehouse and
were under the surveillance of the hospital supply division until is-
sued to the dietetic service. This division also maintained a root
cellar for the storage of potatoes, squash, cabbage, rutabagas, and
apples. All fresh and frozen fruits and vegetables were stored in
the five cubic foot sharp freezers in the dietetic department. Re-
frigerator space for perishable supplies as well as warehouse stor-
age for staple supplies was minimal.

The organization of the purchasing department was deter-

mined at the federal level. The supply department under the

59
Department of Medicine and Surgery in Washington, D. C., originated
the basic purchasing policies and procedures administered by the
field stations. Veterans Administration manuals and central office
directives governed the purchasing activities at the station level.
In Figure 4 the organization of the Veterans Administration Depart-
ment of Medicine and Surgery is shown.

The Chief of Supply Division at the station level was respon-
sible for the formulation and execution of the station policies and
procedures in conformance with the central office manuals and direc-
tives. The organization of the supply division at the station level is
illustrated in Figure 5. The delegation of authority and the coordina-
tion of activities within the department were performed by the chief
of this division, who has been in charge of the supply division for
the last seven years. Between 1943 and 1947 he served as Chief
of the Supply Division in four other Veterans Administration instal-
lations. He has been employed by the Veterans Administration for
twenty-nine years.

The Assistant Chief of Supply Division assisted the chief in
the performance of his duties and accepted the responsibility for the
department in the absence of the Chief of Supply Division. He has

been in this position for the last ten years. For a ten year period

60

 

EENTRAL OFFICE ]

 

[ Deputy Administrator 1

 

Department of Medicine and
Surgery
, Chief Medical Director

J ' l

 

 

 

Assistant Chief Medical Director

for Planning
Assistant Chief Medical Director

for Research 8. Education

Asst. Chief Medical Director
for Dental

Asst. Chief Medical Director
for Medicine 8. Surgery

 

 

 

 

 

 

 

Assistant Chief Medical Director
for Operations
Budget and Finance

Personnel - Supply - Engineer
Organization and Methods

Educational Administrative Staff
I

[Director of Hospital and Clinic I

 

 

 

 

Fina OfficLJ
I -

I

 

 

 

 

 

 

 

 

 

 

 

 

 

» I
' I
l STATlON LEVELJ ,’
- - I,
I
_ 7 _I
1 Hospital Manager I
, . I .
, I
[ Assistant Manager J
_ I g“
f “~
' °§ r ' — Professional Services
lidmms ra we Services I. [Chief of Professional Services]
‘ , I

 

 

 

 

 

 

[ A r I
Personnel- Engineer Wetetics J Medical- Nursing

Finance- Protective Dental-Social Service
Communication A Records Physical Rehabilitation

Laundry l Acute and Intensive
Building 8 Grounds Special Service
Vocational Rehabilitation

Figure 4. Organization of the Veterans Administration Department of
Medicine and Surgery

 

 

 

 

 

 

 

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cozoem easogecoz, cotuem .ceEouoca! Aidan .5295 33683095
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- 1 A - _

 

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.3330 3.35
.075 $334

 

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53,5 :23. 3.64

 

62
before this he worked in several other Veterans Administration hos-
pitals in which he advanced from Warehouse Storekeeper to Assistant
Chief of the Supply Division.

In line directly below the Chief and the Assistant Chief of
Supply Division were three positions of equal rank: Chief of Pro—
curement, Chief of Supply Management, and Chief of Warehouse Sec-
tion. The men in these positions were reSponsible for the activities
Within their departments. Each directed his business and executed
the station policies and procedures that applied to his particular sec-
tion.

The Chief of Procurement was responsible for obtaining on the
open market or by contract the necessary supplies, equipment, and
services. The activities involved in the procurement of these sup-
plies were under the supervision of the chief of this section, who had
occupied this position since 1944. Prior to qualifying for a civil
service position, he was foreman in charge of purchasing for a gar-
ment factory. AS a civil service employee he worked as a ward
attendant, clothing room clerk, and tran5portation clerk until his
promotion to his present position as Chief of Procurement Section.

The Chief of Supply Management was responsible for the pro-

curement of those supplies stored in the Veterans Administration depot.

63

The upkeep of inventories and the control of the stock levels on all
standard items were assigned to this section. The Chief of Supply
Management has occupied this position for the last three years.
Prior to this assignment" he was Chief of the Warehouse Section for
three years. He also served in several other positions in procure-
ment and Supply management sections before his promotion to Chief
of Warehouse Section.

The Chief of the Warehouse Section was reSponsible for re-
ceiving, storing, and issuing all supplies and equipment used at the
hospital. He had held his present position three years and had been
promoted through two civil service grades.

The formal training requirements for key personnel at the

station level were minimal. Training and experience were generally

obtained on the job.

Purchasing procedures

The sequence of purchasing procedures which were involved in
the supply division and the dietetic service at the Veterans Adminis-
tration Hospital, near Battle Creek, Michigan, is illustrated in Figure 6.
The purchasing process in this organization was initiated on a stand-

ard requisition form. All requisitions for subsistence items for use

.
. ‘ws‘LvN-im-u—v—Tv—II ‘3'. vm'...J

iv-r nu.

64

Chief of irocuremeut

l

roramrls requisitions to Open werhct Llern or to Contrect Clerk.

 

Open Tsrket Dlerk c,
Leviews requisitions and inititites procegures.

v

irep res invitation to -‘s and hWLFd form.ano subnits to cualified
vendors and posts copy of invitation in local pest offices.

Obtains tele;hone quotations for those itens under 9500.60. Lists
quotctions on quotetion Sh.et, reviews, and indicates award.

Foraerds infornation to Purchase erder Clerk who prepcres Eurchese
truer and Voucher and forwuris to Chief of Procureuent for his
signature.

Chief of Precureuent

"v "1 '4‘ -~ ‘1 . - D s" 1' " r: * h : -Y . L ‘. ‘~ r r f , I '3 A 4" van
IES}!CC..3 tine. 51.118 lUI‘CLJcC‘- ..ra-.er: (flier. ‘vtLlC..‘sI‘; uni 1,414.13 140 Vene.u-c.

Dietetic Service

"‘

.re received by Subsistence storekceger and Chief of
er desirnote who centers delivery ticket with Fur-
a

i.)

Eerishatle s rplie
Dietetic Service 0
chase Crier. Sub nee Storekeeper checks for quantity uni chief of

Dietetic Service 0 :;i3n;te for quality. -Lief of Dietetic Service signs - “%,.——"
roe ivirg copy of Eurchase order to schedule! e receipt of grouuee.

I

C}

{.24 (‘l‘ 5—

ye
.

l
,.
.Le
M
A

supplies stored in refrigerators flier the superv1sion Oi the dietetic ser-
vice until issued by heads of various preparatio. units or by the chief
Cook or desirnate.

Figure 6. Relationship of Purchasing Procedures and laterial hanagenent,
Veterans Adninistretion hospitei, Battle Creek, michigsn.

   

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. .
bi_nsture.

 

w-- i- . ‘ Chief of Suoply Division .
L- ..z .. ;.:‘ ~

‘ ‘ ' r' *-~‘¢AA‘- °» ,,- --» a - .-. .._ip m7 +: 'WWW A Subsistence Harehouse
IHSPECCS LLlALCL Sliii’ls pillauijf—‘C ‘. filly)". A. ., i: " if 7 ' i: " : j C. LC: *J'3l'1ik}: {... e Ins ; V ENC) l} \f1- :4, Cl Off to Bid gill Attila-3.x; 1.2)}. .L. . 4 lat ..th—l‘ bu \fiLLO vU-tllblnw Oil
-~ ~ quotstloy A
Staple supplies are received and accepted by the Subsistence Store~
and ixuicetos “were or 7uot t;ion sh ct and forwards inio Keeper. Supplies checked against delivgly ticket for coufit pack anQ
“‘5 fiction to one“.-arhet rurchssin: Clerk.for his information end action. weight. Delivery ticliet compared with Purchase Order, descrepaneies
i) noted, and then forwarded to supply'division for processing

device:

A

:{r_ Vendor . . . 1 . .
Suooli s stored in subs1stence warehouse under surveillance of supply

e
livers su plies to dietetic r division until issued to the dietetic serv1ee.

'. " . _ V_ E
receivinA co f , ~.t»§s H q . + c.”“7r,L, _g 4 _ A; .m-; .. service or S‘LSistAnce warehouse. . , , .
5 py 0 UI dd)” reel “0 seine”; “e“ reeolpt “i P‘”“”””' Supplies issued to dietetic serv1ce upon receipt of daily sub81stence
, g e er issue book. After supplies have been issued the Chief Cook Signs the
'rJlQlP? Oi ti” g}:b tip, book to ac owl Q’e receipt of daily supplies.
Oil UIllLJS OI" Dy ii 91.1 v

SUpplies stored
vice until
Cook or de

Subsistence Storekeeper and Postins clerk in supply office take bl-

CJ

’1

0 ‘Li ".— . 7 I”) :-i V,
rlgure 6. (continued) month 15 phflrs cal invshcolY-
Figure 6. HGlutlonuth oi lurcuasii

Veterans Administration l

Prbeuurbo and gateriel .anuJbueqt:
£05 Jibun.’ Bafltle U1 Belg, AiiCiii LJan.

   

66
in the dietetic department originated in the office of the Chief of the
Dietetic Service. The amounts of supplies requisitioned for the menu
were controlled by the standard ration pattern and supply procedures.
A definite pattern was followed for the requisitioning of subsistence
items.

Milk and cream were ordered daily on the basis of an amount
established by the monthly requisition. Fresh and frozen fruits and
vegetables were requisitioned on a weekly basis. Meat, fish, poultry,
eggs, cheese, butter, ice cream mix, and ready-to-eat cereal were
requisitioned on a monthly basis. Supplies from the supply depot
were requisitioned every two months. Uncooked cereals, crackers,
flour, coffee, shortening, salad oil, and margarine were requisitioned
on a quarterly basis. Yeast was requisitioned semi-annually and
malt yearly.

The Chief of the Dietetic Service furnished to the supply of-
fice a description of the item requested, the quantity needed, and the
delivery date. The Veterans Administration had established standard
specifications for packing house and dairy products and for fresh and
frozen fruits and vegetables. The use of these standards was man-
datory. Government standards were used for fish and shell fish.

Descriptions from General Services Administration contracts specified

67
ready-to-eat cereals and dehydrated onions. Descriptions for other
items ordered from General Services Administration were taken from
General Services Administration stock catalogue.

The supply office was responsible for the preparation and sub-
mission of requests for bids and awarding of all contracts for pur-
chases after the initial requisition had been submitted by the Chief
of the Dietetic Service. Specific description of each item was included
in the invitation to bid so that the bidder would have a complete knowl—
edge of the nature of the item requested.

A. pamphlet of standard specifications for fresh and frozen
fruits and vegetables and one for packing house and dairy products
was supplied to each bidder. When the invitation to bid was prepared
for these items, the number listed for each article corresponded to
the item number in the pamphlet which gave detailed Specifications.
This eliminated the need for lengthy descriptions on each invitation
to bid. For items other than these, the complete Specification was
written on the invitation to bid. Quantities were listed in the trade
package or multiples of it. The invitations to bid and the contracts
covered a definite amount to be furnished during a specific period
whenever this procedure was feasible.

Copies of the invitation to bid were submitted to local dealers

and to those within a reasonable delivery distance. The widest

68
practical competition was obtained. Not less than three dealers were
invited to submit bids on any item. A list of interested and qualified
bidders was maintained in the supply office and was revised each
quarter. If a vendor failed to return a bid invitation three consecu-
tive times, his firm could be dropped from the list. Advertisements
for bids were posted in the post offices at Battle Creek, Kalamazoo,
and Jackson, Michigan.

"General provisions have been established by the government
for the submission and awarding of bids. These provisions were at-
tached to each invitation to bid that was sent to each interested bid-
der. (See Appendix Figure 15.)

The time and date at which the bids were opened was listed
on the invitation to bid. The supply officer was responsible for open-
ing bids and recommending awards. The chief dietitian, or her desig-
nate, could attend the awarding of the bids meeting. As the sealed
bids were opened, the firms and their quotations were listed on a
quotation sheet. A written explanation was made if awards were
made to any except the lowest bidder. If tie bids occurred, a. dis-
interested person was selected to draw a tie slip. This information
was recorded on the back of the quotation sheet. Awards were made
to the lowest qualified bidder. This was indicated by a large red "A"

written on the quotation sheet beside the bidder's quotation.

69

Food items that did not exceed $500.00 in value on any one
order were purchased without a formal agreement or bid. Telephone
quotations were usually obtained for these items. This method of
procurement enabled the chief dietitian to purchase special or seasonal
items. When scheduled shipments of supplies failed to arrive, this
method was also used to obtain the items needed. Special orders
of fruits and vegetables were purchased in this manner when antici-
pated farm products failed to mature as expected.

The hosPital also purchased against contracts let by the cen-
tral office. Uncooked cereals, coconut, hydrogenated shortening, salad
oil, margarine, coffee, and flour were purchased in this manner. These
items were on drop shipment and were delivered directly to the sta-
tion from the contractor by periodic shipments of Specified quantity.
All items purchased by drop shipment could be increased or decreased
in amount by 25 per cent of the original quantity ordered. Other
items were also purchased contracts made by the General Services
Administration and the central office. These supplies, which included
ready-to-eat cereals, dehydrated onions, malt, and yeast, were ordered
on an indefinite quantity basis and the contractor shipped the items
upon receipt of the purchase order.

After the awards had been made a purchase order was com-

pleted by the supply office and sent to the bidder to whom the contract

70
was awarded. One c0py of the purchase order was retained in the
supply office. Other copies were distributed to the subsistence ware-
house, finance office, and the office of the Chief of the Dietetic Ser—
vice. The vendor received four copies of the purchase order; he kept
one for his file and returned three to the supply office. The three

copies returned to the supply office became the bill or voucher from

the vendor.

Material management

Federal specifications have been developed with definite de-
scriptions of quality for each product and grade. These grades were
used by the Veterans Administration in establishing standard Specifi-
cations for subsistence items. The following grades were used to
indicate the quality of items acceptable to the Veterans Administra-
tion: U. S. No. 1 grade for fresh fruits and vegetables; U. S. Grade
A for frozen fruits and vegetables; U. S. Choice for canned fruits
and vegetables; U. S. Choice for beef, veal, and lamb; U. S. No. 1
grade for pork products; U. 5. Grade A for poultry and eggs; and
U. 5. score 92 for butter.

Standard Specifications have been established for the Veterans

Administration by the Federal Specifications Board (62, 63). All

71
installations were required to use these Specifications which have
been compiled for packing house and dairy products and for fresh
and frozen fruits and vegetables. Each item was described in detail
in compliance with federal specifications. When unlisted items were
requested, federal specifications were consulted.

The stock level at the Veterans Administration Hospital was
the maximum quantity of an item on hand and on order to meet the
consumption requirements of the hospital for 124 days. Stock levels
for the items stored in the subsistence warehouse were determined
by the supply office in cooperation with the office of the Chief of the
Dietetic Service. Adjustments were made for seasonal requirements.
Stock levels for canned fruits and vegetables were reduced during the
growing season. Pumpkin and mincemeat were ordered during the
fall and winter months. Estimates of the subsistence requirements
of the hospital were made as accurately as possible. These esti-
mates were based on the number of times the subsistence item would
be served per month and the size of the serving.

Supplies stored in the subsistence warehouse were requisitioned
bi—monthly in amounts sufficient to maintain the stock level. The Chief
of the Dietetic Service was responsible for the constant use of the

subsistence supplies in the warehouse. The estimated number of

72
servings and the quantities to be used were considered when the
menu was written. This procedure insured a consistent use of the
items. Under normal conditions the number of items and the quantity
of the items ordered were approximately the same on each requisi-
tion except for the seasonal variations.

A perpetual inventory of subsistence items stored in the sub-
sistence warehouse was maintained in the supply office. Issue en—
tries on the inventory cards were made at the end of two weeks from
the totals in the daily subsistence issue book for the period. These
issues were subtracted from the totals carried on the inventory cards.
The office of the Chief of the Dietetic Service maintained a perpetual
inventory on all subsistence items with daily entries.

The subsistence storekeeper and the posting clerk in the supply
office were reSponsible for taking the bi-monthly physical inventory
of the subsistence warehouse. A c0py of the daily subsistence issue
book was used to record the inventory. The storage of supplies in
the warehouse followed the entries in the subsistence issue book with
few exceptions. This physical inventory was checked against the per-
petual inventory cards in the supply office and the necessary adjust-
ments were made to the cards and the inventory book. The subsis—

tence storekeeper took the corrected inventory book to the cost

73
accounting clerk in the office of the Chief of the Dietetic Service and
the necessary adjustments were made on the perpetual inventory cards.

Daily physical inventories of the meat refrigerators and sharp
freezers were made in the dietetic department by the chief cook or
his designate. The physical inventories were checked against the
perpetual inventory cards and the necessary corrections made.

Subsistence supplies were received by the subsistence ware-
house storekeeper and his assistant, who were supervised by the hos-
pital supply office. HOSpital supplies from the supply depot were de-
livered by truck convoy. Because subsistence, maintenance supplies,
and equipment were delivered in the same truck and the packing slip
was sealed in one of the trucks an unloading problem often arose at
the hospital. Each item was checked against the packing slip as it
was unloaded and the quantity received was recorded in the appro-
priate column on the packing list. If the dietitian questioned the
quality of a staple item, the objections were stated in a memorandum
to the supply officer. He forwarded the information to the appropriate
office.

All perishable supplies were checked in by the storekeeper
and the Chief of the Dietetic Service or her designate. The subsis-

tence storekeeper was responsible for checking the quantity of the

74

items. The Chief of the Dietetic Service, or her designate, was re-
sponsible for checking the quality of the items against the Veterans
Administration specifications. If perishable supplies did not meet
the requirements, a rejection and delinquency report was initiated.

It was mandatory that all packing house products, eggs, and
cheese, except cottage cheese, bear the special Veterans Administra-
tion stamp. This stamp signified that the products had been exam-
ined by a representative of the United States Department of Agricul-
ture before shipment and had been found to meet the detailed re-
quirements of the specifications.

All packing house products, eggs, and cheese were weighed
or counted as received and that amount was recorded on the purchase
order. Weights from shipping tags and packing Slips were disregarded.
The weight or count on the items was checked as the produce was
taken into the refrigerators. Beam scales and platform scales were
available in the meat cutting unit to facilitate the weighing of the
various items.

Fresh and frozen produce was checked for weight or count.
Frozen vegetables and fruit packages were opened to check for qual-
ity and for evidence of thawing and refreezing. Peeling and cooking

tests were run on potatoes; cooking tests were occasionally run on

frozen foods .

75

Storage of staple subsistence items was under the surveil-
lance of the supply office until issued to the dietetic service. Sub-
sistence items in the warehouse were stored in alphabetical order
with two exceptions. Special diet foods were stored in one section;
extracts, nuts, seasonings, concentrates, and foods in small packages
or broken lots were stored in a locked wire cage. Items other than
those stocked in the subsistence warehouse were stored in the re-
frigerators of the dietetic service.

Subsistence was issued by two methods, the daily subsistence
issue book and the dietetic issue slip. The subsistence issue book
was used to order and to issue items stored in the subsistence
warehouse. The chief cook prepared a daily order which listed the
items and the quantities needed. The cost accounting clerk in the
office of the Chief of the Dietetic Service placed the order in the
subsistence issue book. This book was sent to the subsistence ware-
house and the subsistence storekeeper filled the order. He recorded
the quantity delivered directly under the amount ordered. After the
entire order had been delivered to the hospital kitchen, the subsis-
tence warehouse storekeeper and the chief cook checked the supplies
with the issue book. If all items were received in the correct quan-

tity, the chief cook signed the issue book to acknowledge the receipt

76
of the subsistence items. The subsistence issue book was returned
to the office of the Chief of the Dietetic Service and the items issued
were posted on the perpetual inventory cards.

Dietetic issue slips were used to order the perishable supplies
stored in the dietetic department: meat, eggs, fish, poultry, dairy
products, and fresh and frozen fruits and vegetables. A dietetic
issue slip was prepared for the meat cutting unit and the vegetable
preparation unit. The issue slip showed the quantity needed and the
preparation required. The issuing units completed the slips by re-
cording the actual weight, measure, or count of the item issued.
Another issue slip was prepared for dairy products, frozen produce,
and eggs. These slips were collected from the issuing units by the
chief cook and delivered to the cost accounting clerk in the office
of the Chief of the Dietetic Service. The actual amounts issued on

these slips were posted on the perpetual inventory cards.
University of Michigan

The University of Michigan, located in Ann Arbor, Michigan,
is governed by the State Board of Regents. At the time of this study
the three large residence halls for men housed approximately 3,600

students. Three larger residence halls for women housed 1,500

77
students; 600 women were housed in three smaller units and three
cooperative houses. The University Food Service building supplied
the food for these residence halls, the 1,100 bed University Hospital,
the Michigan League, and the Student Health Center. The Michigan
League, the Social center for women, operated a cafeteria for women
students, afiservice dining room, and banquet facilities for staff and
campus organizations.

Expansion of the University of Michigan during the decade of
1930 to 1940 made the need for central purchasing apparent. The
original purchasing organization, located in the University of Michigan
HosPital was enlarged to service the additional residence halls of the
University. Further increase in the number of residence halls after
World War 11 made it evident that purchasing facilities located in
the hospital could not keep pace with the growth of the University.
In 1947 a central purchasing building was constructed to serve the
numerous University food service units and the University HosPital.
This building was financed by funds provided by a bond issue for
refinancing existing residence halls and constructing additional hous-
ing facilities.

The Manager of the Food Service building was responsible

for receiving, storing, and issuing all food used on the campus with

78
the exception of that used by the Law Club and the Men's Union. Ad-
ditional services offered to the campus units by the Food Service
building were the fabrication of meat, the preparation of bread and
rolls, and the freezing of ice cream. The Food Buyer, who was re-
sponsible to the University Purchasing Agent, procured all food which
was received by the Food Service building.

A small kitchen provided Space for the Food Buyer to test
products and for the Michigan Memorial Phoenix Project to investi-

gate the radio-active preservation of food.
Physical facilities and departmental organization

In addition to the campus units, supplies were provided for
the 1,100 bed state-operated University Hospital. Food service units
in the hospital included the hosPital snack bar, the staff and student
dining rooms, and the hospital kitchen. Quantities of food were pur-
chased for therapeutic diets and for extensive animal research proj-
ects.

The Food Service building, completed in April of 1948, was
constructed of reinforced concrete and brick. The building consisted
of two floors and a basement, and a section of the building was de-

signed for future expansion.

79

Approximately 50 per cent of the Space on the second floor
was assigned to storage for staple groceries, canned foods, sugar,
and flour. Constant temperature and humidity were maintained in
the flour room by air conditioning units. The balance of the space
on this floor was assigned to freezer storage.

All food except fresh fruits and vegetables, crackers, and
cookies were received on the first floor. The truck area was en-
closed and could accommodate three tractor-trailers simultaneously.
The freight car siding had space for several cars, but only one car
could be unloaded at a time. Originally a conveyor belt connected
the truck platform and freight car dock with the three floors. This
mechanical method of transportation was discontinued and merchan-
dise was then unloaded and stacked directly on pallets (wooden plat-
forms) which could be picked up, transported, and stacked with
motorized lift trucks. Some food supplies were loaded directly on
the pallets at the Detroit Terminal Market. Mechanized overhead
tracks led into the building from the receiving dock and the freight
car entrance. Meat could be moved on these tracks directly into
the refrigerators near the receiving area.

The administrative offices were convenient to the main entrance

and receiving area. They were occupied by the Manager, Food Buyer,

80
gene ral office staff, and Chief Dietitian of the Residence Halls. Ad-
ditional Space was allocated for offices in the various production
units : bakery, meat department, receiving department, and shipping
department. The office space and the receiving area comprised ap-
proximately one-third of the first floor; the remaining Space was
allotecl t6 the bakery, meat department, and ice cream room. One-
half of the meat cutting area was occupied by six refrigerators; the
othe: r half was occupied by equipment and work space necessary to
fabricate meat. Two refrigerators were located in the ice cream
unit, one for the storage of ice cream mix and the other for a hard-
ening room.

The basement provided dry storage for staples, refrigerated
storage for fresh fruits and vegetables, and facilities for the shipping
department. Two heavy-duty freight elevators, one at each end of
the building, facilitated the movement of merchandise from the floors
to the: shipping department. Four mechanical lift trucks were used
extensively for the transportation of food supplies throughout the
building - A pneumatic tube installation and an intercommunication
system accelerated business transactions.

The Manager of Service Enterprises was responsible for ser-

Vice leIlCtions of the University and for welding departmental units

81
into an effective and smoother operating organization. The Manager
was assisted in the performance of his duties by the managers of
the following departments: residence halls, food service, binding,
blue printing services, instrument shop, laundry, photographic ser—
vice s , printing department, and rental properties. The organization
of Se rvice Enterprises is illustrated in Figure 7.

The Manager of the Food Service building was responsible
for it 8 operation and maintenance. He was assisted in his job by
the supervisors of the meat department; bakery and ice cream depart-
ment; shipping, receiving, and warehousing department; business of-
fice; and plant operation and maintenance. In Figure 8 the organi-
zation of the Food Service building is shown. His major responsi-
bilitY' was liaison between the Food Service building and the operating
units - The Manager of the Food Service building graduated from the
Department of Business Administration of the University of Michigan
in 192 1 and had been employed by the University for thirty-three
years - He had occupied his present position as manager of the Food
Service building for the past two years. Prior to that time he had

served as Business Manager for the Food Service building, Business

ManagEr for the University of Michigan Hospital, and Chief Accountant

f
or the U niversity.

82

 

[ Board of Regents I

7 President _
University of Michigan

|

I Vice President I

 

Business and Finance

I
r

f 8 "BMW." :l Eontriiler—j

ervice E nterprise I

 

 

 

 

 

 

 

 

 

— Residence Halls rPurchasing Agent I

- Food Service Building 1

- Binding Department I Food Buyerj
[i -

—— Blueprinting Services r8ecretaryJ

-— Instrument Shop I Produce BuyerJ

 

-— Laundry

-— Photographic Services

—- Printing Department

 

L Rental Properties

Figure 7. Organization of Service Enterprises, University of
Michigan

83

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84

The Food Buyer, who was directly reSponsible to the Purchas-
ing Agent of the University (see Figure 7), worked closely with the
Manager of the Food Service building. The Food Buyer was respon-
sible for the procurement of food supplies, valued at $1,000,000.00
each year. The purchasing procedures were established by the Uni-
versity Purchasing Department. Food procurement policies were
dete mined by the Food Buyer, subject to the approval of the Uni—
vers ity Purchasing Agent. The Food Buyer was responsible for set-
ting up Specifications for the supplies he procured. He provided all
units with what they needed, when they needed it, at the lowest pos-
sible price consistent with good quality. The objective at all times
was p roviding high grade products. The Food Buyer for the Univer-
sfiY of Michigan graduated from the Department of Hotel Administra-
tion at Michigan State College in 1949. He had been employed as
F°°d Buyer for the last two years. Prior to that time, he had
Served as Food Steward at two state institutions for a combined total
of three years.

The Produce Buyer was reSponsible for the purchasing of all
fresh fruits and vegetables issued by Food Service. He procured
SuPplies from carload receivers at the Detroit Terminal Market and

was responsible for buying. loading, and delivery of produce to the

85
Food Service building. He also served as the truck driver and hired
help at the-terminal to assist with the loading. The Produce Buyer
served twenty years at the Union Produce Terminal in Detroit as a
buyer and'seller. He had been employed by Food Service for one
year.

The office supervisor was responsible for the accounting and
business procedures of the Food Service building. Requisitions were
processed, inventories maintained, charges posted to customer ac-
counts, vendor invoices were cleared and released to the University
Business Office for payment. The office supervisor had been em-
ployed by the University of Michigan for twenty-four years. He had
served for three years in his current position as office supervisor.

Prior to that time, he had worked twenty-one years as Business

Office Supervisor at the University of Michigan HosPital.

Egrchasing progedures

\

In Figure 9 the relationship of subsistence purchasing pro-
cedures and material management at Food Service, University of
Michigan, is shown. The Food Service supplied the managers of the
hOSpital food service units and residence halls with printed requisi-

tion forms to facilitate the ordering of meats, fresh produce, frozen

‘4‘“. ""01. _.-—-,‘_ '

luv”

86

Shipping Department

Fills fresh fruit and vegetable requisitions and indicates quan-
tities issuei and the lot number stamped on the produce. For-
wards requisitions to general office to be priced, extended, and
posted on inventory cards.

Fills staple and frozen fruit and vegetable requisitions. Notifies
general office if lot numbers listed on requisitions do not agree
with lot number stamped on items issued.

Consolidates orders from.meat department and bakery. A priced and
extended cepy of the requisition, furnished by the general office,
accompanies each delivery, except for bakery and milk products.

Delivers supplies according to established schedule.

Receiving Department

Two receiving clerks are reSponsiblo for receipt of all subsis-
tence supplies.

Leat and meat products are inSpectod, weighed, and compared with
grade and weight recorded on delivery ticket and Purchase order.
Staples Chuchod to see that quantity delivered corresyond: with
amount on delivery ticket and :urchaoe order. Processed ruits
and vegetables checked for quantity. Government grading certifi-
cates required for shipnents of canned and frozen fruits and
vegetables.

Food supplies stamped with the lot number assigned to that day
and receipt of merchandise reported to general office.

Figure 9. Relationship of Purchasing Procedures and material han-

agement, Food Service Building, University of lichigan.

 

 

 

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--t - oi L ‘liO if a; w 11;.u-,.ii. _.Jod s'nrv'ice
" .:. \4 1. dl\ _.‘ j .g _L j ‘3‘ \) .Lv‘ ,
.L L LA' -y. - _' k ’ L \\’\ I ’ C (1 J. ’ r -Ll" ‘ ‘ 3". 3! 1L(/ u' ’
,1“; .L 4 JL 0 .- . J 2715? J, 1'; . it"; . 87
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iJl. .- ..u.; .--.o . reed Edy.’
‘ , _ 1: 1 «a: I l\ nrf; ...: r I-Jnr ._ _ 4'" "a 1r ' I I . "‘ i t -
i . Lo . i , --- - -e outnito “telly teunSt ior ouotation ior meat products to selected
, . > ( m‘fi (u 3' (\ ': . 7- 1r- “ j 1‘ v"'_, r‘. I“ ‘ rv -r- v- ‘ ' '
I - .i _ o . l L V. . 1 i e l i 1 I VGFLLiul a. ,1le I‘ltlt 1.8 .‘UFCi’ " ( 08". dr'c Or bet; on Suilmng’J' SubeLl'LtEBd by
. - ’ L.-- L. -, V _.i;1 1 L- meat dOPfirtment. 10nfsT lic: 65 quotationS, reViews, and indicates
- - ale, , wgtu_.m., '4. jg..1l ch LLTLLEVr «L; :. award.
I . 3 -. . . i‘ . . , -' v . - 7‘) I ~ '3 L " " \v ‘ ':' ." ,~ - , ~.- \ . I I .2 , :3 ’4 .3 l“ n 1" I ""3 , ' " f‘ n ‘. 1" 1’ 3r. 1“ ’1’,” —‘ L. ‘ r‘ ’ ‘ . 3 .
‘ 1. -2 . out”; cM -.L .4.qu ‘vl L; J... l 1_,' ;‘.l.,_ut ugly nu t; -; ui ,, U... .. -L. — ~- w! -'~/I L "Jontei, 125:1 'v'ri:Ol.C~i>cil€f Q” {CL/QC}? lOl ids UCGboej lOOCiO When flil’ln
., ’ T ,, .-. 3‘,-L ,r- ;-‘. n. 3" firm/.11 —-.,‘,» .. . r'n m‘": " 5’1 . "‘ 3‘ 1.
RA .. x L A J t k l‘ QV V J \J .LU 1 .‘ . L ._ L“. ‘V’_ ....‘.,$_.\.'-. u;Lm.x, J \ l’K/Ll LJ.\J.£ 01‘ A515. (_.LL 9 1163:2‘.-.‘;’(-_ (Jr C 1.1.1.“:11 ituv rflur Cilia S\/KA 18 to SI.;C~—Ll to buy Olrect.
v 1 K \ 1. _ ’ ..1, 7, ‘1' Lu, ‘ l i _L K ’ {J ...L/ 4 ‘ ‘ _, \.1il~u j \..'\1J.v1/ Ukl -_ x J x klb‘ L J II‘UCl In»; 01.3.1.3: Aulk/l L¥ J'v' 1- ill dailS/r I EQUlSj-L’; ODS 9 bontact represeflt-
car‘~c erLive of nroe,ss n, cor. mp anies and purchases yearly supplies by

liv tar purche:e subject-approval-price-purchase, and

Iuture ie .,

 

iOr-hTi nil. ~11 urea; reiuisitiug; to local dair;. After delivery is competitive b’;,

V RLisf yo ufiei Lens are Lrieed, exte Jed, and gested Oh ihv-ntor;

er;.L Submits yearly Requests for uotati one ior eggs,omilk, and related
fresh dairy :roductso JutHiES dec1u€51 ior quotations every two

333V333‘”443F3 ¥F©h Stfiwie and 4?C®*U 155’ rw“ bLlL1HS i‘T 130~5 303 yen rs ior celfee, Cookies cracners , potato chips, Salad dressing:

in Lt \ WHA --luuidt.l ;‘ J. ‘A1.1 ”1 1,-Tc TotiilES Evui "UJQT as and soup bases. nevieus quotations and inc icates award.

3rd:fi iifimt and 'r segue; leads aw reten nlnlhun stunt levels. QriCG,

E5?“ , 1 i k refinisitiaw; or ; veniory cards. List let nu.bers, Erocures cereals direct from manufacturer for price stated in COD-

-ra.;aiyd 1-: iCIuo; are t: is “:30, Qfi requisition. tract made by State .OOC M38? in Lansing Submits orders as .l
needed against these contracts.

‘1“ -.Tj Q- ire _ frui- «u \ etalle requisitiono, deduct , v

0”‘ 1» [Hr “err; An' :Jru w n - » 1L 1: quoe Lugpr. Irepares and forwzrd s Purchase Agreement to University Purchasing
Silice.

**C 1:" 1'-” iRV;ioCT’ o: 3o,tti ; hauls .o all th - are ctuft d

‘“” ~ Hr 1e;'t .
‘3’ 1 ~J u;1ioi-i ...... to chi Li; optic L.t. Produce Buyer

wrifigq, gCQiUiyg peport Iron inier salon su: fl+€§ by receiving Purchases fresh produce dlreCD iron Cdrload reCeiverg and pro«
fice _ ~' ' ~ - / ~ - 2' r 4's - occurs ‘?'——““ ducers. Transactions on a credit baSis. guantities purchased

n“?“~311. eelPare with :ureheye LP or and ll a dioer‘ouVJ
‘”*z¢¥ith newort is forwarded to good ifu";r Le ne_oti(tos with are stated on surmary pTOViied bYo General 011108. Notifies
V33“Y‘1J correct tre discrehgrc; an; .“en notifies the unnoral ECH€“€l 011103 Of Lfir rket flucuations. Submits vendor's in-

of H +;<: _- ,_ ’ voice to general office.

Operates tractor-trailer to tranSport free h pro: luce and emer-
‘ Vendor 4%'---- gency supplies iron Detroit to th e iood Service building.

fills orders and
delivers sup_lies. _ r v , ‘V
‘3 BURCHASLvG Head

 

Prepares Purchase Order from.Purchase Agreement

agrees .
‘ submitted by Food Buyer.

‘Q331 n ;endor'sl nvoice a voucher number, i1 Receivi;;.r eport
-IU1Vendor's Invoice. rorwards to University UUlLuub n5 oliice l5?
Pia, “But , . 1. .
Forwards copies of rurchase Order to the selected
’ vendors, Food Service general office, and receiving
department.

‘7

 

Figure 9. (continued)

 

   

88
foods, baked goods, ice cream, dairy products, and staples. These
requisitions were submitted to the general office on a scheduled basis
two or three days before the items were needed.

Clerks in the general office summarized the requisitions for
fresh fruits and vegetables, deducted the current inventory, and sub-
mitted a summary to the Produce Buyer. Requisitioned items which
were purchased on the Open market were summarized by clerks in
the general office and in the meat department. As inventories of
staple items and processed foods approached minimum stock levels,
the general office notified the Food Buyer. Notification from the gen-
eral office authorized the Food Buyer to purchase meats, processed
foods, dairy products, and staples and the Produce Buyer to purchase
fresh fruits and vegetables. If either buyer became aware of a mar-
ket fluctuation, he advised the general office.

The Produce Buyer purchased fresh fruits and vegetables
from carload receivers at the Union Terminal and from producers
at the Farmer's Market in Detroit. All transactions were on a
credit basis. The Food Service has established a storage and supply
center at one of the commission houses near the terminal. This
center served as a delivery base for subsistence and supply items
required by the Food Service in case of emergency. The merchandise

was delivered to Ann Arbor by the Produce Buyer.

89

Meats were purchased once a week on a competitive bid basis
from packers. Telephone quotations were acceptable if confirmed in
writing. Awards were made on the basis of quality, dependability
of delivery, and price.

Processed fruits and vegetables were purchased and stored
from one packing season to the next. Purchases were made by deal-
ing directly with the representative of the processing companies.
Pineapple and other items, which were procured from the same packer
each year, were purchased at a firm price and shipped in one delivery
when the products were packed. The remainder of the items were
procured by a subject-to-approval-of-price (S.A..P.) purchase. For
these items the Food Buyer placed tentative orders with one or more
companies. After these companies submitted their prices, the Food
Buyer accepted the most advantageous offer with the understanding
that the produce would be delivered in one shipment as soon as it
was packed.

Competitive bids for eggs and for milk and related fresh dairy
products were requested once a year. All negotiations for these items
were based on a fixed differential over the New York Mid-Western
egg market, Detroit Class 1 milk market, and the Chicago butter

market. A flour supply for six months was purchased in the fall

90
on a competitive bid basis. When that supply was exhausted, flour
was purchased in carload lots as needed.

Contracts for coffee, cookies, crackers, potato chips, salad
dressings, and soup bases were awarded for a period of two years.
The preference of the food service unit managers determined the
selection of vendors for these items. Sugar was procured through
one sugar broker who furnished the Food Buyer with timely informa-
tion concerning market fluctuations and current availability of supply.
Two high- ratio shortenings, Primex and Sweetex, were ordered by
brand name. Other hydrogenated fats and lard were ordered on a
competitive bid basis and the awards were made on a basis of one
year.

After selecting a vendor, the Food Buyer forwarded the pur-
chased agreement to the University purchasing office, which then is-
sued a purchase order. Three copies of the purchase order remained

in the University purchasing office. Other copies were distributed to

the vendor, Food Service accounting office, and the receiving office

at Fo od Service .

Material management

Written specifications for meat and meat products have been

prepared by the Food Buyer. These specifications were supplied to

91
purveyors who submitted quotations. Amendments to the specifica-
tions were prepared and filed each year. A card index was main-
tained on processed fruits and vegetables preparatory to establish-
ing written specifications for those items. The Food Service has
developed sources of supply from purveyors who have served the
University honestly and efficiently in the past.

Requests for quotations on meats were based on Specifications.
Government grading was mandatory for beef, veal, and lamb. Pork
must be Michigan Grade No. l, and U. S. inSpected pork received
first consideration. The specifications described the cut, specified
the weight range, and indicated the grade which was acceptable. The
numbers on the specifications corre3ponded with the number on the
sheets on which the Food Buyer recorded the bids. Invitations for
quotations for processed fruits and vegetables were submitted to the
brokers or directly to the packers. Samples and government grad-
ing, certificates were required for all items. Invitations for quota-
tions for canned fruits and vegetables Specified grade, style, size of
container, and count. The grade, variety, style, and weight of con—
tainer were indicated for frozen fruit and vegetable products. Three
packers on the West Coast furnished the majority of the processed
fruits and vegetables. Tomato products were purchased from Indiana

and apples and cherries were obtained in Michigan.

92

The following federal. grades were used to indicate the quality
of items acceptable to Food Service: U. 5. Grade A and U. 5. Grade
B for frozen fruits and vegetables; U. S. Grade Fancy, Choice, and
Extra Standard for canned fruits and vegetables; U. S. Good and Com—
mercial for beef; U. 3. Choice, Good, and Utility for veal; U. 5. Choice
and Good for lamb; Michigan Grade No. l for pork and pork products;
U. S. Grade A for poultry; and Fancy, Heavy Weight, and Mixed Col-
ors for eggs.

Minimum stock levels have been established and were listed
on inventory cards. Through the use of these minimum levels, or-
ders were placed advantageously to obtain satisfactory prices and to
replenish stock. The rate of consumption on processed fruits and
vegetables determined the yearly purchase of these products.

A perpetual inventory was maintained in the Food Service
business office for all subsistence supplies. Entry was made on the
inventory record for date, quantity ordered, and order number when
an order for merchandise was placed. When the merchandise was
received, a second entry recorded the date, order number, name of
vendor, number of receiving report, and the quantity received. At
time of payment to the vendor, a third entry added the voucher number,

unit price, per cent of discount, total amount paid, and the freight

93
charge. A. fourth entry recorded the lot number and the unit price.
A second inventory record card indicated to whom the items were
issued, recorded the quantity received from the vendor, and noted the
quantity on hand.

A lot number was designated for each day of the year and
all merchandise received on a given day was stamped with that par-
ticular mark. The lot number was affixed to each carton, sack, bar-
rel, or other type of container. Each commodity on the inventory
record was likewise subdivided into lot numbers. When the inventory
record indicated that a given lot number was depleted, all the stock
marked with that number should be issued. If there was a discrep-
ancy between the inventory record and the physical inventory, an
immediate check was made.

Physical inventories were taken throughout the year on a ro-
tating basis so that each item was actually counted every four months.
If discrepancies were found, the inventory cards were adjusted to
agree with the stock supply. The method for pricing the inventory
was the actual price as merchandise was issued on the first-in-first-
out policy. Lot numbers performed an important function under this

procedure. making it easy to determine which items had been in stock

for the longest period of time.

94

Supplies were delivered to the Food Service by vendors,
transportation companies, railroad facilities, and Food Service trucks.
Two employees were assigned to receive all supplies. When goods
were delivered in carload lots or when several large truck shipments
arrived simultaneously, it was necessary to obtain additional help
from other departments. However, the receiving clerks were respon-
sible for checking in the supplies.

Staples were checked to determine whether the quantity deliv-
ered correSponded with the amounts stated on the delivery ticket.
Government grading certificates were required for shipments of canned
and frozen fruits and vegetables. Fresh fruits and vegetables were
checked for quality and quantity as they were purchased at the mar-
kets in Detroit. All meat and meat products were inSpected, weighed,
and compared with the grade and weight recorded on the delivery
ticket. The platform scales for miscellaneous items and the overhead
scales for weighing meat were located adjacent to the receiving area
to facilitate the checking of supplies.

Receiving clerks checked the merchandise very carefully
against the delivery ticket and a copy of the purchase order. The
receiving department reported the receipt of merchandise to the gen-

eral office where a receiving report was written. Variations between

95
amounts received and the amounts stated on the purchase order were
also reported to the office. A complaint report, when completed,
served as the basis for negotiations by the Food Buyer with the ven-
dor to correct the discrepancy. The receiving report was checked
against the vendor's invoice; and, if the two agreed, the vendor's
invoice was. assigned a voucher number and was transmitted to the
University business office for payment.

Staple supplies were stored on all floors of the building. In
the larger storage areas, supplies were stored according to available
floor Space. Smaller storage areas had been assigned for the storage
of flour, sugar, cookies, crackers, and small-sized cans.

Twenty-seven refrigerators, with temperatures ranging from
70° F to -24° F, were used for the hardening of ice cream, and for
the storage of frozen foods, fruit juices, dairy products, dried fruits,
fresh fruits, and fresh vegetables.

Although the original freezer storage Space had been increased
four times, it was still inadequate. Therefore, carload lots of frozen
foods were stored in Detroit. In the near future a large refrigerator,
which had been used for the storage of carcass meats, will be con-
verted into freezer storage.

Supplies were ordered by the respective heads of the food ser-

vice units on standard order forms furnished by the Food Service

96
building. These orders were picked up by the Food Service truck
driver and were submitted to the general office. The completed
forms were distributed to the butcher shop and the bake shop in
Food Service to be summarized. The orders were then filled ac-
cording to schedule. The general office tabulated the orders for
staples and for fresh and frozen fruits and vegetables. These orders
were priced and totals were extended before being sent to the shipping
department to be completed. Orders for the butcher Shop and the
bakery were returned to the general office for pricing and extending
of totals before delivery to the ordering unit.

The shipping department was reSponsible for filling the orders
for staples and for fresh and frozen fruits and vegetables. This de-
partment also supervised the delivery schedule and consolidated orders
from other departments to insure economical delivery. Supplies for
each unit were assembled on a platform truck or wooden pallets which
could be transported to the ordering units. Pallets and trucks were
picked up later Staple supplies were issued weekly and all other
items on a daily or aS-needed basis. Milk was delivered to the in-
dividual units by the vendor.

A priced and extended copy of the order accompanied each

delivery with the exception of orders for bakery products, milk, and

"‘7

97
cream. Pricing and extension for orders of fresh fruits and vege-

tables were based on the purchase price of the preceding day.
Michigan State College

Michigan State College, located in East Lansing, Michigan, is
governed by the State Board of Agriculture. During the fall term of
1953, the student enrollment was 14,500. Approximately one-half of
the students lived in residence halls and co-operative houses which
were under the direction of the Department of Dormitories and Food
Services. The seven residence halls for women housed 3,200 students
and the four residence halls for men housed 4,500 students. Food
service units located in the Union Building and Kellogg Center served
food to conference guests, faculty, and students who resided in the
Lansing and East Lansing area.

Prior to 1948 the purchasing of subsistence supplies was de-
centralized. With the completion of the Food Stores building in that
year, which was financed on a self-liquidating basis, a system of
centralized purchasing was initiated. The manager of Food Stores
was reSponsible for purchasing, receiving, storing, and issuing all
food used on the campus with the exception of those items supplied

by the college dairy and the college farm.

98

Experimental farming plots operated by the college furnished
the Food Stores with limited amounts of lettuce, green beans, potatoes,
carrots, cabbage, and apples during the growing season. A food ser-
vice laboratory, which served the Department of Institution Admini-
tration and the Experiment Station as well as the Department of
Dormitories and Food Services, worked with the Food Stores in test—
ing new food items which could offer variety to the menu? Compari-

son of quality and portion costs of food items purchased by the Food

Stores was also a function of the laboratory.

Physical facilities and department organization

The Food Stores at Michigan State College provided the sub-
sistence supplies for all food service units. This three-storied brick
building, completed in 1948, was centrally located within a one-mile
radius of the campus food service departments. The interior con-
struction of ceramic tile walls and quarry tile floors required a

minimum amount of maintenance.

The entire third floor of the building was utilized for the stor-
age of staple supplies, and the capacity of this floor was recently

increased by removal of partitions. A. major portion of the storage

Space on the second floor was allocated for staple supplies. The

99
second floor also included the office of the Manager, a conference
room, and one large freezer room for the storage of carload lots
of frozen foods. An increase in the demand for frozen fruits and
vegetables necessitated the expansion of the freezer storage Space.
This demand was met in 1952 by the conversion of a section of the
second floor storage area for staple supplies into a large freezer
room. At present the Food Stores can stock twenty carloads of
frozen foods.

All supplies were received on the first floor. A railroad
spur track with unloading facilities for two railroad cars was located
on the west side of the building; on the opposite side a large loading
platform accommodated five trucks. The meat fabrication department
and three walk-in refrigerators with a capacity of five carloads of
fresh meat comprised one-half of the first floor. The balance of
the area on this floor was divided between freezer storage and
offices. The freezer storage Space was divided into four units.

One of these units was designated as a working freezer for storage
of supplies which would be used during a two-week period of operation.
To expedite receiving and issuing of supplies, offices for the staple,

produce, meat, and accounting departments were located adjacent to

the receiving area.

>f

100

A large section of the basement was allocated to six walk-in
refrigerators located in units of three at each end of the hall. These
refrigerators furnished storage space for five carloads of fresh fruits
and vegetables, eggs, cheese, and concession supplies. To provide
for the operation of the refrigeration system and the maintenance of
the building, a compressor room and a work shop were also located
in the basement.

To facilitate the movement of supplies through the building,
several mechanical conveyors were used: freight elevator, overhead
track, and conveyor belt. A hand-operated hydraulic lift tranSported
wooden racks on which the majority of the supplies were stored. The
freight elevator, located in the middle of the building, served all
three floors and the basement. Carcass meats could be moved from
the receiving clocks to the meat fabrication units or the meat refrig-
erators on an overhead track. Conveyor belts connected the truck-
loading platform with the two refrigerated units in the basement.

The adequate storage Space and mechanical methods of trans-
portation in the Food Stores enabled Michigan State College to pur-
chase frozen and canned foods on a yearly basis without taxing the

storage capacity of the building or imposing a hardship upon the

employees.

101

The Manager of the Department of Dormitories and Food Ser-
vices was accountable for the Operation of all units on the campus
which housed and fed students and guests. He was responsible for
coordinating these departmental units into an effective and smooth
operating organization. The departmental Managers for the Union
and Kellogg Center, for Men's Residence Halls, Women's Residence
Halls, and Food Stores assisted the Manager in the performance of
his duties. The organization of the Department of Dormitories and
Food Services is shown in Figure 10.

The Manager of the Food Stores was accountable to the Col-
lege Purchasing Agent for purchasing procedures and to the Manager
of the Department of Dormitories and Food Services for management.
In Figure 11 the organization of Food Stores is illustrated.

The Food Stores Manager was responsible for the entire oper-
ation of the building and for determining the items to be purchased
and the method of procurement. The subsistence purchasing budget
for a year amounted to approximately $1,500,000.00; in. addition the
manager spent $500,000.00 for cleaning supplies, dishes, utensils,
and concession items. The Food Stores Manager conducted weekly
meetings with the Managers of the food service units. These meetings

promoted harmonious relationship and close cooperation between the

102

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104
Food Stores and the food service units. The Food Stores Manager
had occupied his present position for nine months. He graduated
from Michigan State College and majored in agricultural education.
After a tour of military duty from 1942-1945, he served one year as
a Michigan Agricultural Extension Agent. From 1946 to 1953 the
Manager of Food Stores carried these campus assignments: instruc-
tor in the School of Agriculture and Manager of the Short Course
Dormitory, manager of two different residence halls for men, Hous-
ing Director, and Counselor for Men.

The Head of the Staples Department also served as the AS-
sistant Manager of the Food Stores. In addition to the reSponsibility
for purchasing, receiving, storing, and issuing all staple items, he I
checked all invoices received by Food Stores and compared them with
the purchase orders. His assistant was reSponsible for the mainte-
nance of inventory cards and other records essential to the opera-
tion of the unit. Two staple warehouse men received, stored, and
issued all staple supplies. The Head of the Staples Department had
been employed in this position since 1948. Prior to his induction
into the Army, he had served as a Store Manager for the Atlantic
and Pacific Tea Company, had operated a grocery business of his
own for six years, and had Spent a year as Storeroom Clerk in one

of the campus food service units.

105

The Head of the Meat Department purchased the meat and
was reSponsible for the maintenance of the records. Reliable em-
ployees were assigned to receive, store, and issue meat supplies.

All necessary meat items were fabricated by employees under his
supervision. The Head of the Meat Department accepted this position
in 1948. Upon his return from military service, he was employed

for approximately one year as a meat cutter and storeroom man in
one of the college food service units. For two years prioer to his
induction into the Army, he had worked for a local meat distributor.
He had also served as a storeroom clerk at the Union and had worked
for an independent grocer for a number of years.

The Head of the Produce Department purchased the fresh
fruits, vegetables, eggs, and cheese and was responsible for the
maintenance of the records used by his unit. An assistant was as-
signed to receive, store, and issue supplies. The Head of the Prod-
uce Department had purchased produce for the college for the past
twelve years. Prior to that time he had worked for an independent

grocer.

Burchasing procedure

 

In Figure 12 the relationship of subsistence purchasing pro-

cedures and the material management of Michigan State College Food

.J

.— \"o‘xqwxvu—u. _...

[54-4w - -

1

Head of Staples Department
Yearly lurchases

Reviews records of previous year and estimates quantity required
to meet demands of tne next school year. checks perpetual in-
vbntory to determine items to be ordered.

Submits Request for euotations to approximately fifteen fresh
and frozen fruit and vegetable brokers and packers.

Reviews quotations, inSpects sanples, and indicates award.

Prepares a iurchase order dork sheet for each award which lists
the nane of the vendor, time of delivery, quantity, description
of item, unit, and priceo Submit: iurchasc order dork sneet to
office of hanager.

1

Daily Iurchases

Consolidates requisitions from food service units and checks
perpetual inventory to determine itens to be ordered.

Contacts salesnen.for current prices on standard products and
arranves for delivery or obtains quotations, reviews, and in-
dica tes award.

Prepares rurchase Order Work Sheet which lists the name of ven-
dor, time of delivery, quantity, description of item, unit, and
price. Submits Purchase trder Jork Sheet to office of manager.

106

 

l

Supplies received by dss ignatei employee who checks physical count
and weight a’ainst ds'iv very ticket. If in agreement, signs and
forwards to. ead oi' otavles ucpartment. he checks delivery ticket
against rurchase -rder 1or price, quantity, and weight. If items
check, delivery ticket is forwarded to the Food Stores accounting
office.

Supplies stored in assi ned staple storage area.

Sup,lies issued upon rec-ipt of Food Stores Invoice for Staples
form prepared by the head of the Staples tepartnent. Inventory
balance of each item is noted on invoice by clerk in accounting
department. Actual count conpared "ith amount of invoice.
Supplies delivered to.food service units according to an estab-
lished schedule.

Figure 12. Relationstip of lurchasing irocelures and}.ateria1
tanagenent, Food Stores Building, aichican State
College.

 

 

 

.ood service supervisors submit requisitions
JL? Stcjlco, pro.uce, an; mcat to heads of
. t,'

J.
F " "1 1 ' + " ‘. "V . ':, "- . r» -: x P‘ , j
L ...L ‘J’J Lit/IDLLI" unfollbo 4.11 1 JUL}. utul' (5 [A ,

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rv~<
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I

I

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Vur‘hl ' ~- 5 L._~ . ._£;,' Lift L .1 .5 ‘Jr ‘Cll‘f: (2-. think}: . 3 11:1“ 1.1!.‘2.-1. .L (XI/ll. LIL) 1.'iie.1.ve or.
'1. .

11.- :‘s. . 1 t. a“ 1 v L to Quote on all or any part
Of 1L0“- lica-g., ;Lfil;iu3t.ln. able 'to ltdnngn gimxursto 1M1.n.ich
1,1,3; \A r 1‘1“"; .
1vC‘F1L5LlJ... I- {.7 lv""’l_.1_51L—'-.F.:j Ilz‘rfi infiqi ~“.;-‘,I"\.".«;",; l‘f_;-’L,", SIC Q:._‘ff.‘-.‘;}

‘ gxx A— $.—¢ a... ..... .....k U-. A.-. Lu-.. L4 Ax. A..\/~;L
Selliv' .-§.:nt-#1. to .nitcr-jxxa iii: s ia)l)c cumicres.

I

‘ncr‘ f i. 1,». .. ..: - .. .' -. . x..- - , .. ; .: , ..
K’LH'J‘ '~ .\-. I.) - anal 4-11.1.Lkliib i Tun.» VCIA -.UI‘E. 1.111 «.1 HUI l. {31:69 u . ALSVLGlffi;
or tn; necessary items.

H. s ... ' 1 .
:‘_, 1 , .I' >‘ '.'~ \ A. II . 'f e. ..v" /~, 0 f ‘
L ' «‘1 "’""\- "r- '4.‘ A *I1>5\_‘_‘\"_1(6JIS d'var\«~\ J— 1

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vdase crder Jerk sheet 1dr each award Wnich lists

()V‘. ’1‘ r L i ,g - ‘ —. ‘0 ,- V ‘ 1 r u ’ v .1 7'; (‘ "‘ >0 3‘ o w, o _\ ,-
chnmy a.c o. CUichrd, quantity, er e, de.cription Ol item,

(‘7 ‘7‘ f /_ ,- .r . H . ‘ .., g _ r- ’ ‘ Y ‘ 1 I; ' \' Q ,. A . , ' (' .'. ‘ r g ' 'V ' ' - ’1
and; Ace. aun.its rcrcnase cider dork uhtbt LO OlIlCC Ul nanabelo

 

1 -

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k. a. J. .A. ~- "I C‘J. 1911,1191 (1K;- CI

- , . -... vs, ., .. ., .- “ .' / 4.3-.
«durabir'v "-I‘EE’lai'tys r1;r(.lllc'.‘..8 U1”-.c1' -r'or.. 111 Ol’fiatium

L
—‘ ‘ 1 ' - . 3 -, :_ ‘. , -_ _ _. \
a; fix", lur‘<3l‘;g;.1e LI‘QCI‘ ..Qr‘g 911.131. 1‘UI‘CJLLC
.91? 2" N ,wa‘fi ,_._!‘ ..P_‘(:.H_“ b'/' 3? v '1) 1 "w ’0‘“
' ‘ .... k‘ (*4- 1- k-'4~ .Ai —r--I. J \r‘..\/ 1-.(A1L'.(-,\.«J .

V H 1' " ' ' - .' - , -‘ . - I 1'». , .
null} .:urc:1.sc tifl-ers laWi :iJAdezml lrpwslcs-Nanichcr‘

1.

Vendor

" '~' w : ‘ . M... ..
deilVQTS supplies to .OOd stolen,

 

l

V V 5 "-. j _ ’1 re.
head oi eradlte departnnnt

tonsolidates realisit’ons from iood service units and checks against

1
inventory to VGtCTQLAG itens to be crcereo.

a o 1 , ' n‘ I. rm 3 .1 ,_\, (-' J. W. 7‘ I,
Lists supplies nose~ on quotation sheet. 1elcpncneo the three
dualified vendors and informs then of the quantity decireo.

Vendors file quotations by telephone to the head oi the Produce
Danartnent. He lists cuotzticns on quotation sheet; reviews, awards
the order, and notiiies the vsnaor oi the award.

y.“

., 1 .. , _ - 7 ,_ (_ ‘ r ‘ n ‘ , ‘ , ,- , . "4 1
LOUtCCtS the at; 953 Cheese vendors, negotiates for a price and
places the order.

View «WC-o
L Mpg}. ‘\ t.) 1 .

l
J. l
- ~ - '1 a - .3 -4~‘-'\ —.4'
- I. . l .. ,3- », ‘. '_ ‘- ,.. ' —. , 5r 1 fr .2! \Y' ), , ’1
*“e r'"e o1 cre vaudoi, Lime oi delivery, quantity, dosc.i,ciuh U1

1 ' .
.Kt L~‘.\1-'\'
‘

.N . ‘ I , o i- _ --l- 1. r P‘ . ’ ~q ,-r‘ ’11.! ‘1" . I ' .:.‘r. 0
item, unit, dam prlcg. Subnics rurcnase ordcl auln neet to oilice

. . v') . .f . v‘ , —4 j. 121’ .r\' ‘.‘
«s6 trier work oncet ior each orde place. union lists

.' . ‘ . -\ , .... . )-
Oi but; Lemon-bf.

 

‘AUTliCS received by GCSifnhiéi employee who checks physical
COMfi5 Weight, and quality againSt dolivcry ticket. Ii in
a§mfiflent, Signs and forwards to head of heat departnen . He
9Kmk5 delivery ticket against lurchasc Order for price, qual—
itY1<wantity, and wei_ht. lf items check, delivery ticket is
i£mwfirded to Food Stores accounting office.

S r ~ . . . . . n - -
{fihflies stored in.meat refrigerators until issued or iabricated
fufl Cuts ardered by the food service units.

WdJles issued upon receipt of a Food Stores InVOice ior Meat

firmflflcd by the head of the Meat Department and delivered to
00dService units according to an established schedule.

ure 12. (continued)

03‘
pi.
0’1

1

Supplies received by designated eiployee who checks physical count and
weight against delivery ticket. If in agreement, Signs and iorvards
to head of StallCS De artnent. he checks delivery ticket against
lurchase Order for price, quantity, and weirht. If all items check,
delivery ticket is forwarded tO'the Food Stores accounting office.

Supplies stored in produce refrigerators.

Supplies issued upon receipt of food Stores Invoice for lroduce form.
prepared by the Head of the Produce Department and delivered to food
service units according to an established schedule.

 

 

 

 

 

108
Stores is shown. A requisition was used to inform the Food Stores
of the items needed. The supervisors of the food service units were
reSponsible for the preparation of the Food Stores requisition for
staples, produce, and meats. Kellogg Center and the Union Building
ordered supplies daily; the other food service units submitted requests
on a scheduled basis.

The Food Stores supplied the food service units with printed
requisition forms which facilitated the ordering of staples, produce,
and meats. The staples requisition and the produce requisition indi-
cated the item, unit, and pack; the meat requisition listed the meats
according to classification and the various cuts which were available.
The food service supervisor designated the quantity of the items de-
sired on the requisitions. The forms were collected by a represen-
tative from the Food Stores and delivered to the heads of the respec-
tive departments at Food Stores.

Staples and meats were requisitioned once a week and prod-
uce twice a week by the food service units. All dairy products, ex-
cept butterettes, were ordered daily from the Michigan State College
dairy. Bread products not produced by the food service units were
ordered by the units as required from a local bakery.

The open market buying procedure was followed by Food

Stores instead of the practice of advertising for bids or competitive

109
formal buying. The head of each department at Food Stores obtained
quotation from convenient sources of supply for the item which he
was authorized to purchase. These quotations were written or ver-
bal. This system was successful because of the high standards of
business ethics established between Food Stores and the regular ven-
dors. After the department head had reviewed these quotations for
quality, service, and‘price, he awarded the order and prepared a
purchase order work sheet. This work sheet furnished the following
information: name and address of vendor, date of delivery, descrip-
tion of the item ordered, quantity, unit, and quoted price.

A. negotiated buying procedure was followed for processed
fruits and vegetables. A. selected broker was notified of the require-
ment; then he negotiated with reSponsible sources of supply for those
items. On occasion, the Head of the Staple Department negotiated
directly with the food packer.

The purchase order work sheet which was submitted to the
Manager by the department heads listed the information necessary
for completing the purchase order. This order was signed by the
Manager, and one copy was retained by his office. Other copies
were distributed to the college purchasing office, college accounting
office, head of the department which submitted the purchase order

work sheet, Food Stores accounting office, and the vendor.

 

....l

.t‘
r

. Fill

.... o .

III.P.I --l nu.”-

110

Mate rial managem ent

 

The Food Stores did not rely upon written descriptions to in-
form the vendors of requirements. Purveyors were selected for
quality of product, integrity, and dependability. Requests for quo-
tations on meats were based on Federal grades and weight range.
Invitations for quotations on processed fruits and vegetables requested
the names of the packers. The vendor could also be asked to submit
samples in addition to furnishing a government grading certificate.
Invitations for quotations for canned fruit and vegetable products also
specified grade, style, size of container, and count. The grade, va-
riety, style, and weight of container was indicated for frozen fruit
and vegetable products. The sugar content was requested for frozen
fruit packs.

The Department of Agriculture has developed standards of
quality for most of the important agricultural commodities and has
established various types of inspection and supervision to insure
uniform application of these standards. Included in these standards
were definite descriptions of the various established grades. These
grades were used by Food Stores to indicate the quality desired when
quotations were requested for meat, poultry, fish items, and for

processed fruits and vegetables.

111

The following grades were used to indicate the quality of
items acceptable to the Food Stores: U. 5. Grade A. and U. S. Grade
B for frozen fruits and vegetables; U. S. Grade Choice and U. S.
Extra Standard for canned fruits and vegetables; U. 5. Choice, Good,
Commercial, and Utility for beef; U. S. Choice, Commercial, and
Utility for veal; U. S. Choice for lamb; U. S. No. 1 and U. S. No.

2 for pork products; U. S. Grade A and U. S. Grade B for poultry.

The Food Stores purchased food items without reference to
stock levels. They were guided mainly by consumption records from
the preceding year and current requisitions.

A perpetual inventory was maintained in the Food Stores ac-
counting office for all items except meat. The method for pricing
the inventories was the first-in-first-out policy. In addition to the
accounting office perpetual inventory file, the head of each depart-
ment maintained an inventory card system. The meat department
took a physical inventory once a week and the produce department
twice a week. In the staples department the inventory was verified
each time an item was issued by checking the inventory balance
against the physical count. This inventory balance was recorded on
the staple storeroom order by the clerk in the cost accounting office

when the order was prepared. The perpetual inventory in the Food

112
Stores accounting office was spot-checked during the year and checked
once a year by a physical count.

Supplies were delivered to the Food Stores by vendors, trans-
portation companies, and railroad facilities. Some merchandise was
shipped to transportation terminals and transported by Food Stores
trucks. Selected employees have been authorized to receive the sup-
plies, which were unloaded on the receiving dock, and to sign delivery
tickets.

Staples were inSpected at delivery to insure that the quantity
corresponded with the amounts stated on the delivery ticket. Quality
of staple goods was not checked by Food Stores unless complaints
were received from the food service units. Produce items were in—
Spected for quality and count and were spot—checked for weight. All
meat products were weighed and the amount was compared with the
weight recorded on the delivery ticket. The platform scales, located
on the receiving dock, and the rail scales, located outside the meat
refrigerators, facilitated weight verification. Meats were also checked
to certify that the grade of the meat delivered correSponded with the
grade requested.

The designated receiving clerk checked the items delivered

against the supplies listed on the delivery ticket. This ticket was

113

forwarded to the Head of the Staples Department who compared the
ticket with the purchase order and noted discrepancies. When varia-
tions could be corrected by telephone, the necessary contact was
made; otherwise a written memo was submitted to the college ac-
counting office which assumed the re5ponsibility for correcting the
error.

Prior to the construction of the new freezer room, the third
floor was used as a storage space for carload lots of staple products
and the second floor was used as the issue room for this merchan-
dise. Although supplies were issued from both floors at the present
time, most orders were assembled on the second floor.

Carload lots of frozen food were stored in the freezer located
on the second floor. Small less-than-carload-lot shipments (L.C.L.)
and frozen fruits which were subject to drip loss were stored in the
freezer units located in the basement. All freezer temperatures were
maintained at 0° F or lower. Meats were stored in designated re-
frigerators at 34° to 36° F. The temperatures of the produce refrig-
erators were 38° F for fresh fruits and vegetables, 40° F for apples,
and 45° F for eggs.

Orders for staples, meats, and produce were prepared by the

Food Stores department heads from requisitions submitted by the food

114
service units. After they were completed by the respective depart-
ment heads,.the orders were sent to the Food Stores accounting of-
fice to be priced and to be posted on the perpetual inventory cards.
These orders were returned to the respective department heads and
used by the warehouse men to issue the supplies to the food service
units. Staple supplies and potatoes were issued weekly; produce and
meats were distributed on a semi-weekly basis. Two copies of the
order form accompanied the supplies when they were delivered to
the food service units. Upon receipt of the merchandise, the food
service supervisor signed both copies; one was retained by the food

service supervisor and the other signed copy was returned to Food

Stores.

SUMMAR Y

Certain steps are essential to all purchasing procedures and
follow a common pattern. The pattern is varied to meet Specific
needs and problems of individual organizations. The practices of
the institutions selected for this survey illustrate some of the varia-
tions and similarities of the common pattern.

There was little basis for comparison of physical facilities
between the two hospitals in the study. The Veterans Administration
HOSpital, near Battle Creek, Michigan, received staple supplies from
a storage depot located near Chicago. The warehouse for the mental
hospital at Ypsilanti served as a storage center' for other state insti-
tutions located in the area. Because of the distance between the
Veterans Administration HOSpital and the wholesale fruit and vegetable
markets, perishable supplies were procured on a weekly basis. On
the other hand, Ypsilanti State Hospital, located near Detroit, utilized
the primary central markets and procured fresh fruits and vegetables
according to daily demands.

A survey of the physical layouts of the Food Stores building
at Michigan State and the Food Service building at the University of
MiChj-gan pointed out factors basic to efficient planning. Simplicity

115

116

was the keynote in the Food Stores building at Michigan State Col-
lege. Large, open, storage areas, easy transportation, and interior
construction which required a minimum amount of maintenance al-
lowed Michigan State College to Operate a centralized purchasing
program efficiently with a minimum number of employees. Because
of the proximity of the terminal markets in Detroit to the Food Ser-
vice building in Ann Arbor, fresh fruits and vegetables were pur-
chased daily. To facilitate unloading at the Food Service building,
produce was placed directly on wooden pallets at the source of sup-
ply. However, the numerous small areas assigned for the storage
of subsistence items complicated the receiving and issuing of supplies.

The departmental structures for Ypsilanti State Hospital and
for the Veterans Administration HosPital, near Battle Creek, Michi-
gan, were established at the state and federal level and there was
little flexibility. At the Veterans Administration Hospital the estab—
lished purchasing method determined who was to procure the food
item.

Basically the departmental organization for purchasing subsis-
tence supplies at the University of Michigan and Michigan State Col-
lege showed little similarity. The Manager of the Food Service build-

ing at the University of Michigan was reSponsible for the operation

117

and maintenance of the building. Two Food Buyers, under the direc-
tion of the University Purchasing Agent, procured all supplies for the
Food Service building. The Manager of the Food Service building
supervised the receiving, storing, and issuing of these items. An
office supervisor, under the direction of the Manager, was account-
able for the business procedures of Food Service.

The Manager of the Food Stores building at Michigan State'
College was responsible for the operation and maintenance of the
building and for the procurement of supplies. The reapective heads
of the staples, meat, and produce departmerts were accountable to
the Manager of Food Stores for purchasing, receiving, storing, and
issuing the food items under their supervision.

A number of men in the key jobs at the institutions studied
had occupied these positions for a period of twenty years and had
been promoted from within the organization. The Food Stores Man-
ager and the reSpective heads of the staples, meat, and produce de-
partment at Michigan State College had served a tour of duty in at
least one of the campus food service units prior to Food Stores
assignments.

A requisition was used by the four institutions in this survey

to initiate the buying procedure. In order to reduce administrative

118

costs and to spread the buying activities evenly throughout the year,
requisitions for selected supplies were submitted to the State Food
Buyer each month by the state institutions. Supplies for the Veterans
Administration Hospital were requisitioned on an established schedule
and only those items indicated by the Chief of the Dietetic Service
could be procured by the supply division. The quantity of the supplies
ordered by the state and federal hOSpitals was controlled by a stand-
ard ration pattern. Requisitions were submitted on a scheduled basis
by the food service managers at the University of Michigan and Mich-
igan State College. Requisitions were summarized by a clerk in the
general office and in the meat cutting unit at the Food Service build-
ing, University of Michigan. These summaries which were forwarded
to the Food Buyer or the Produce Buyer gave them authority to pur-
chase the food supplies needed to fill the requisitions. The commodi-
ties ordered by the food service managers at Michigan State College
were summarized by the respective heads of the staples, meat, and
produce department at Food Stores.

The Business Manager at Ypsilanti State HOSpital and the Food
Buyer for the State of Michigan purchased the supplies for the hos-
With few exceptions these supplies were procured by competi-

pital.

tive bid. An Ypsilanti wholesale produce vendor purchased fresh

r——-—___

119

fruits and vegetables at the Detroit Terminal Market and charged the
hoSpital twenty-five cents per container for delivery charges. Con-
tracts for staple items were awarded to vendors on a yearly basis

and each state agency ordered supplies as needed. The central of-
fice, located in Washington, D. C., procured all staple supplies for

the Veterans Administration hOSpitals and stored them in supply depots
until requisitioned by the individual hospitals. Centralized contracts
were also issued by central office. The majority of the purchases
made at the hOSpital were by formal competitive bid.

Direct buying was practiced by Food Service at the University
of Michigan and by Food Stores at Michigan State College. Large
volume purchases, adequate storage space, and simplified purchasing
procedures facilitated this practice at the University of Michigan. The
success of open market buying at Michigan State College resulted
from the high standards of business ethics established between Food
Stores and the regular vendor's. Speculative buying was practiced in
the procurement of frozen meats at Food Stores. The Produce Buyer
at the University of Michigan purchased direct from carload receiv-
ers at the Terminal Market and from producers at the Farmers
Market in Detroit.

Purchase orders were used by all institutions in this study

and copies were forwarded to the units reSponsible for receiving the

120
supplies. All institutions except the University of Michigan used a
standard invoice-voucher form.

The institutions used federal grades to inform the vendors of
the quality which was acceptable to them. (See Appendix Figure 16.)
A food committee had established food commodity standards for the
mental hOSpitals located in Michigan.

Food Stores at Michigan State College was the only institution
studied which did not use written Specifications. The regular vendors
and brokers were aware of the high quality of merchandise demanded
by Food Stores. Detailed specification cards which corresponded to
the standard food commodities were located at each state mental hos-
pital and at the office of the State Food Buyer. The supply division
at the Veterans Administration HosPital furnished each vendor with
written Specification pamphlets for packing house and dairy products
and for fresh fruits and vegetables. Written Specifications for meat
and meat products were supplied to vendors who submitted quotations
to the Food Buyer at Food Service. Government grading certificates
and samples of processed fruits and vegetables were requested by the
State Food Buyer, the Food Buyer for Food Service at the University

of Michigan, and the Manager of Food Stores at Michigan State Col-

lege.

121

Stock levels were established by the Veterans Administration
H05pital and the Food Service at the University of Michigan; the other
two institutions were guided by previous consumption records.

Perpetual inventories were maintained by all institutions in this
study and verified by a yearly physical inventory at Ypsilanti State
HOSpital and the Food Stores at Michigan State College. A bi-monthly
physical inventory was taken in the subsistence warehouse at the Vet-
erans Administration H05pital and a daily inventory was conducted in
the dietetic service. Lot numbers assigned to each day of the year
and stamped on all items received at Food Service, University of
Michigan, provided a constant check between supplies on hand and
those carried on the perpetual inventory cards. If there was a dis-
crepancy between the lot numbers listed on the perpetual inventory
cards and the lot numbers indicated on the requisition, an immediate
investigation was made. Each department head at Food Stores, Mich-
igan State College, maintained an inventory for the supplies in his
unit.

The subsistence supplies were weighed, measured or counted,
and carefully inSpected at all institutions to verify that the quantity
and quality delivered complied with the purchase order. A receiv-

ing report was prepared in the warehouse at Ypsilanti State Hospital

122

and forwarded to the hospital accounting office. The warehouse indi—
cated the new balance for each item on the receiving report and the
accounting office compared the totals when the supplies received
were posted on the perpetual inventory cards. Two clerks received
all subsistence supplies at the Food Service building at the Univer-
sity of Michigan. These employees were not under the supervision
of the Food Buyer, but they notified him if the supplies received did
not comply with the descriptions on the purchase order. The receiv-
ing clerks reported the receipt of the merchandise to the general of-
fice where a receiving report was prepared. At Food Stores, Mich-
igan State College, the respective heads of the staples, meat, and
produce department were reSponsible for the receipt of the supplies
they purchased.

The warehouse at the Veterans Administration Hospital was
the only storage area where supplies were arranged alphabetically.
In the other institutions, available Space at the time of delivery de-
termined where the supplies were stored.

Ypsilanti State HOSpital warehouse issued supplies upon the
receipt of an institution stores requisition. A. separate requisition
was used for each food commodity. The warehouse recorded the

balance remaining on the requisition when it was forwarded to the

123
accounting office. This procedure enabled the accounting office to
compare the balance on the inventory cards with the actual amount
on hand in the warehouse.

At the Veterans Administration Hospital subsistence supplies
were issued by two methods, consisting of a daily issue book for
staple supplies and dietetic issue slipsfor perishable supplies. The
shipping department at the Food Service building, University of Mich-
igan, filled the requisitions for staples and for fresh and frozen fruits
and vegetables and notified the general office if the lot numbers did
not agree. Orders from the other units were consolidated by the
shipping department. At the Food Stores building, Michigan State
College, an invoice was prepared by the respective heads of each
department from requisitions submitted by the food service super-
visors. This invoice was used to issue the supplies. The amount
of staple supplies listed on the perpetual inventory cards in the
accounting office was indicated on the invoice and could be com-
Pared with the actual amount on hand as the orders were filled.

At all institutions a copy of the order was sent with the supplies
when they were delivered to the requisitioning unit.

A review of the departmental structures, purchasing procedures,

and material management of the four institutions studied illustrated

 

   

124
adjustments which were made in the common purchasing pattern for
the purpose of implementing an efficient purchasing program in the

individual institutions.

10.

LITERATURE CITED

American Hospital Association. Manual of specifications for
canned fruits and vegetables. Chicago, Am. Hosp. Assn.
1947.

Army food and messing. 3rd ed. Harrisburg, Pa., Military
Service Publishing Co. 1943.

Basic information. Los Angeles, Calif., California Fruit Grow-
ers Exchange. 1952.

Bemis, Kris, and Seelig, Ray. How to know your onions .
and your tomatoes, too. Am. Rest. Mag. 38 (no. 1):
48-50, 122-128. Jan., 1954.

Blue goose buying guide. Pittsburgh, Pa., American Fruit Grow-
ers, Inc. 1950.

Board of U. S. Civil Service Examiners. Examination for pur-
chasing officer and procurement analyst. Joliet, Illi-
nois, Board of U. S. Civil Service Examiners Ordnance
Ammunition Center, U. S. Army. 1953.

Brodner, Joseph; Carlson, Howard H.; and Maschall, Henry T.
Profitable food and beverage operation. N. Y., McGraw-
‘ Hill Book Co., Inc. 1951.

Bryan, Mary de Garmo; MacFarlane, Alberta M.; and Hawkins,
E. R. Establishing and operating a restaurant. U. 8.
Dept. of Com., Wash., D. 0. Industrial (Small Business)
Series no. 39. 1946. T

Bryan, Mary de Garmo. The school cafeteria. 2nd ed. N. Y.,
F. S. Crofts and Co. 1946.

Bull, Sleeter. Meat for the table. N. Y., McGraw-Hill Book
Co., Inc. 1951.

125

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

126

Campbell, Clyde Henderson. Campbell's book, a manual on can-
ning, pickling and preserving. 3rd ed. rev. Chicago,
Vance Publishing Corp. 1950.

Dana, Arthur W. Kitchen planning. N. Y., Harper and Broth-
' ers Publishers. 1945.

Dahl, J. O., and Breland, J. H. Food standards handbook for
quantity cookery. 2nd ed. Stanford, Conn., Dahl Pub-
lishing Co. 1945.

Dahl, J. 0. Restaurant management. 4th ed. N. Y., Harper
and Brothers Publishers. 1944.

Storeroom management. Stanford, Conn., Dahl Pub- —
lishing Co. 1945.

Dukas, Peter. Food service space allocations subject of fellow-
ship study. Institutions Mag. 29 (no. 2):1, 72-79. Aug.,
1951.

Duncan, Charles E. How to put the control in inventory control.
Modern Hospital. 77 (no. 2):?3-76. Aug., 1951.

E5persen, Henry W. The success of a food cost system depends
upon the use that is made of it. Modern Hospital. 73
(no. 5):112-114. Nov., 1949.

Facts about fresh pears. Hood River, Oregon, Pear Bureau.
1953.

Federal Security Agency. Definition and standards for food.
Food and Drug Administration Service and Regulatory
Announcements. Wash., Govt. Print. Off., 1951.

Frooman, A. A. Five steps to effective institutional food buy-
ing. Chicago, A. Frooman and Associates. 1948.

Fruit and vegetable facts and pointers. Wash., D. C. United
Fresh Fruit and Vegetable Association. 1952.

 

 

23.

24.

25.

26.

27.

28.

29.

30.

31.

32,

33.

34.

35.

127

Heinritz, Stuart F. Purchasing principles and applications.
2nd ed. p. 48. N. Y., Prentice—Hall, Inc. 1951.

Houston, Micky. Profits from produce. Am. Rest. Mag. 38
(no. 6):46, 48, 50. Dec., 1952.

Jacobs, Morris B. The chemistry and technology of food and
food products. 2nd ed. Vol. 1. N. Y., Interscience
Publishers, Inc. 1951.

The chemistry and technology of food and food products.
2nd ed. Vol. 2. N. Y., Interscience Publishers, Inc.

1951.

Janssen, Wallace F. The law behind the label. J. Am. Diet.
‘ Assn. 28:609-613. 1952.

Jucius, Michael J. Personnel management. Rev. ed. Chicago,
Richard D. Irwin, Inc. 1951.

Kir-Stimon, William. A look-in at your walk-in. Am. Rest.
Mag. 37 (no. 5):l70-172, 174. May, 1953.

Kitchen, C. W. Standardization and inspection of farm products.
U. S. Dept. of Agr. Yearbook Separate 1754. 1941.

Lewis, Howart T. Procurement. Chicago, Richard D. Irwin,
Inc. 1949.

Logan, Paul P. Making maximum use of fabricated, frozen meat
and poultry. Rest. Mgt. 67 (no. 5):Z9-31, 82. Nov.,
1951.

Modern miracles with beef. Rest. Mgt. 69 (no. 3):
38-39, 72, 80, 82, 84. Sept., 1951.

Modern miracles with chicken. Rest. Mgt. 69 (no.
2):38-40, 98-99. Aug., 1951.

Modern miracles with citrus fruits. Rest. Mgt. 71
(no. 5):46-43. 92. 94, 96, 99. Nov., 1952.

N—

 

 

 

 

 

36.

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

128

Modern miracles with fresh vegetables and fruits.
Rest. Mgt. 72 (no. l):40-44, 78, 80, 82, 86. Jan., 1953.

Modern miracles in fruit and vegetable processing.
Rest. Mgt. 72 (no. 3):48-51, 100, 104. March, 1953.

Modern miracles with lamb. Rest. Mgt. 70 (no. 1):
38-41, 70. Jan., 1952.

Modern miracles with pork. Rest. Mgt. 69 (no. 5):
42-44, 70, 74, 78, 80. Nov., 1951.

Lundberg, D. E., and Kane, Vernon V. Low operation pulse?
Try doses of cost control. Institutions Mag. 30 (no.
5):1-2, 29-37. May, 1952.

McCallister, Kenneth J. Principles and practices in the devel-
opment of standards for grades for agricultural products.
Paper presented at the Marketing Research Workshop,
Michigan State College. East Lansing, Michigan. 1951.

McKinley, Marjorie M. Food cost control. J. Am. Diet. Assn.
24:847-853. 1948.

Macha, Geo. L. System of checks, controls and eliminates loss
by fraud. Institutions Mag. 29 (no. 4):81, 84. Oct.,
1951.

Meat manual. 5th ed. Chicago, National Live Stock and Meat
Board. 1952.

Miller, Edmund. How to scrutinize food purchasing, receiving,
storage. Institutions Mag. 23 (no. 8):2, 30-31, 106-107.
Aug., 1950.

Mitchell, Margaret L. Achieving quality food production in today's
kitchen. J. Am. Diet. Assn. 30:1032-1038. 1949.

Mohler, John R. The inSpection stamp as a guide to wholesome
meat. U. 5. Dept. of Agr. Info. Bul. 92. 1952.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

129

Muellet, Paul F. Meat cutting manual. N. Y., Ahrens Publish-
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National Association of Purchasing Agents. Handbook of pur-
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tional Association of Purchasing Agents. 1939.

Handbook of purchasing policies. Vol. 2. N. Y., 11
Park Place, National Association of Purchasing Agents.
1944.

Northrop, May W. Planning the floor layout for the food service
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Kitchen to patient-~a straight line is the shortest dis-
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American HOSpital Association. 1952.

Production and Marketing Administration. A fruit and vegetable
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1952.

Production and Marketing Administration. Check list of U. S.
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1952. '

Proffitt, Robert C. Procedure in purchasing canned foods. J.
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Reindollar, William F. Food supervision and grading. In Jac-
obs, Morris B. The chemistry and technology of food
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Interscience Publishers, Inc. 1951.

Schensul, Joseph. Spotting and eliminating hidden operating costs.
In Natl. Rest. Assn. Conference course lectures on man-
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58.

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62.

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67.

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130

Shircliffe, Arnold. The buying of fresh fruits and vegetables.
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Southerland, F. L., and Linderer, Elinore T. Questions and an-
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Spangler, Raymond L. Standardization and inSpection of fresh
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604. 1946.

Spriegel, William R. Principles of business organization. N.
Y., Prentice-Hall, Inc. 1946. '

Standard specifications for fresh and frozen fruits and vege—
tables. Wash., D. C., Veterans Administration. 1949.

Standard specifications for packing house and dairy products.
Wash., D. C., Veterans Administration. 1953.

Todoroff, Alexander. Food buyer's information book. Chicago,
The Grocery Trade Publishing House. 1946.

Viehmann, Catherine M. A consumers' guide to U. S. standards.
U. S. Dept. of Agr. Misc. Pub. 553. 1947.

Wenzel, George. L. The secret to low food costs. Am. Rest.
Mag. 35 (no. 5):62-68, 178. May, 1951.

Wenzel, G. H'. Wenzel's menu maker. Austin, Texas, 403 Riley
Road. 1947.

West, Bessie Brooks, and Wood, Levelle. Food service in insti-
tutions. 2nd ed. N. Y., J. Wiley and Sons, Inc. 1945.

Western ways with fresh vegetables and melons. Los Agenles,
Western Growers Association. 1954.

70.

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72.

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Whitefoot, Robert, Jr. Resolving some problems of receiving
and storing. Hospitals. 23 (part 1):?5-78. June, 1949.

Winger, Effie May. Food accounting system assists in the con-
trol of costs. I_n_ American HOSpital Association. Read-
ings in hospital dietary administration. p. 371-377. Chi-
cago, American Hospital Association. 1952.

Wood, Adeline. The purchase of foods according to specifica-
tions. J. Am. Diet. Assn. 25:955-962. 1949.

Quantity buying guides. Vol. 1. N. Y., Ahrens Pub-
lishing Co., Inc. 1952.

Quantity buying guides. Vol. 2. N. Y., Ahrens Pub-
lishing Co., Inc. 1954.

APPENDIX

132

 

 

133

Figure 13. Questionnaire

1. Gene ral Information

Name of institution Type of institution
Location of institution
Governing board for
institution
Names of persons supplying information Title

‘ .

 

 

 

 

 

 

a

Type of food service units
Units which serve meals to male students or patients
Total census
Units which serve meals to female students or patients
Total census
Other food service units and census

Type of unit Census
1.

 

 

 

 

 

 

 

2.
3.
4

 

Budget for subsistence supplies for calendar year 1953
When was centralized purchasing initiated?
How was food purchased prior to this time?

 

 

 

II. Physical Facilitie 5

Location of central stores

Within a mile radius of food service units? Yes No
Construction of central stores

Building materials for outside walls

Inside walls

 

 

 

 

Floors
Facilities for receiving
Railroad spur Yes No
Number of cars Spur will accommodate
Truck dock covered, uncovered

Number of trucks dock will accommodate

 

 

 

 

Facilities for staple storage

supplies arranged alphabetically
supplies stored on dunnage racks
supplies arranged according to groups
high cost supplies stored separately
bulk supplies pre-packaged
windows heavily screened and locked
floor constructed of materials which will withstand heavy

t rucking

( ) floor drain located in area to permit easy cleaning

( ) pest control

Allocation of Space

134

 

 

Name

Location

Space Allocated

 

Amount

Adequacy

Temp.

 

Office

 

Staple storage

 

Meat fab rication

 

Preparation of fruits
and vegetables

 

Bake ry

 

Sharp freeze

 

Refrigerations
Produce

 

 

 

 

 

 

 

 

Sharp Freeze
l.

 

 

 

2.
3.
4.

 

 

 

 

 

 

135

Changes which have been made in space allocation within the last
ten years
1.
2.
3.

 

 

 

Production of agricultural products Yes No
Products produced
1.
2.
3.

 

 

 

III. Organization of purchasing department

Who determines and develops purchasing policies and procedures?

 

Are purchasing policies written or verbal?

Who is directly reSponsible for the actual procurement of
subsistence supplies?

Who decides the quality and type of food which shall be
purchased?

Responsibilities of centralized purchasing unit
1.

 

 

 

 

 

 

 

 

0‘01.th

 

7.
What assistance is received from other departments in order to
fulfill these reSponsibilities?

 

 

IV. Training and experience of key personnel

 

 

 

 

Title of position Training

Person in position A Grade school years
High school years
College years

 

Major field
Minor field

 

 

136

Last ten years of experience. Start with current position
Title of position Length of service

 

 

 

 

 

 

IRWNH
vaNI—I

 

 

5. 5.
Additional training or experience pertinent to present position

1.

2.

3.
Qualifications of the position

1.

2.

3.

4

Responsibilities of the position
1.

 

 

 

 

 

 

 

 

 

 

 

 

 

Kilo-FUJN

 

V. Purchasing

Methods used at institution
Method of procurement Items purchased

 

 

 

 

 

 

 

Ulrthr-I
Ulutht—I

 

 

Does the amount of money involved in the purchase determine the
method of procurement? Yes No

Bid and award
Procedures followed when purchasing on a bid and award basis

) sealed bids received

unsealed bids received

bids opened publicly

bids opened privately

bids submitted to an established list of bidders

AAAAA
vvvv

137

( ) bids accepted from any vendor
( ) lowest bidder receives the award
If not, what factors determine the decision?

 

 

Who is authorized to make the award?

 

 

 

Are quotations requested from a select group of vendors? Yes
No
Are verbal quotations acceptable?
Are verbal quotations verified in writing? Yes No
Are arrangements made for quantity, delivery date and price when
purchases are made by contract? Yes ' No
Are written specifications used? Yes No

If not, how are vendors informed of requirements?

 

 

 

Are government grades uSed as a guide for- purchasing? Yes
No

If not, what guides are used?

Are brand names used to describe the quality desired? Yes
No

For what items? 4
Are certain foods obtained from a specific geographic area?

 

 

 

 

 

 

 

 

Yes No
Item Geographic Area
1. 1.
2. Z.
3. 3. T T
4. 4.
Is government grading mandatory—for all meat products? Yes
No
Are stock levels used to initiate reordering? Yes No

If not, what methods are used to determine the reordering point?

 

 

How often do the food service units submit requisitions for the
following items?
Item Requisitioned Delivered

- Meat

Fresh produce
Frozen produce
Dairy products
Eggs

. Staples

 

 

 

 

 

 

 

 

O‘U‘lrthJNv—I
O‘U'lrhUJNt—a
0~UI¢~wNH

 

 

138

What information is furnished by the purchase order?

 

 

Are all purchases verified by a purchase order? Yes No

Who compiles the information needed to complete the purchase or-
der?

To whom are purchase orders diSa'ibuted?

Who signs the purchase order?

 

 

 

 

 

 

 

Fre— Fre-
, , Sources
Spec1f1- of quency quency
cations Su 1 of of
pp y Purch. Del.

Food Items Grades

 

Beef

Veal

Lamb

Pork

Poultry

Eggs

Fresh fruit and
vegetables
Frozen fruits and
vegetables
Canned fruits and
vegetables

Flour

Coffee

Sugar
Dried fruits and

vegetable s

Dried cereals
Prepared cereals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VI. Receipt of supplies

Who is reSponsible?
Are supplies received at other units? Yes No
Who is responsible?
Are employees authorized to Sign the invoice? Yes No
Does the person reSponsible for the receipt of food have a copy of
the purchase order? Yes No
Are the quantities indicated? Yes No
Who compares purchase order with the invoice?

 

 

 

139

Procedure for receipt of canned fruits and vegetables.

 

 

Procedure for receipt of frozen fruits and vegetables.

 

 

 

Procedure for receipt of meat products.

 

 

 

Procedure for receipt of staplZS.

 

 

 

Who makes final decision for acceptance of goods?

 

 

VII. Storage of supplies

Who is responsible? *
Is a perpetual inventory maintained? Yes No
How often is perpetual inventory checked by physical inventory?

 

 

By Wham?
Method used to price inventory.

 

 

VIII. Issuing of supplies

Who is responsible?
Who authorizes the issue of supplies?

 

 

Procedure for filling and checking orders for produce.

 

 

Pro—dedure for filling and checking orders for meat.

 

 

Procedure for filling and checking orde; for produce.

 

 

Procedure for filling and checlgng orders at the food service units.

 

140

 

 

 

 

 

 

Figure 16. Market Grade Acceptable to the Individual Institutions
Veterans , ,
Ypsilanti Adm'ni _ Univers1ty Michigan
1 S
Item State tration of State
H03p1tal HosPital Michigan College
Beef
Carcass . . . . High utility Choice Utility
Primal cuts . Choice Good, Choice,
Commer- Good,
cial Commer—
cial,
Utility
Fabricated
cuts Good, Good,
Commer- Commer-
cial cial,
Utility
Veal
Carcass . . . . Good Choice
Primal cuts . Choice Choice Choice
Fabricated
cut 5 Choice , Comme r-
Good, cial,
Utility Utility
Pork
Carcass . . . . Farm Farm
Loins ..... No. 1 No. 1 No. 1
Hams ..... No. 2 No. 1 No. No. l 8: 2
Bacon ..... No. 2 No. 1 No. 1 No. 1 8: 2
Lamb
Carcass . . . . Choice
Primal cuts . Choice Choice Choice
Fabricated
cuts Choice, Choice
Good
Mutton
Carcass . . Good

 

141

 

 

 

 

 

 

 

 

Figure 16 (Continued)
Yp sil anti Veterans Unive rsity Michig an
Adminis-
Item State tration of State
Hospital HoSpital Michigan College
Frozen Fruits A A 8: B A 8: B
Frozen Vege-
tables A A A 8: B
Canned Fruits Fancy, Choice Fancy, Choice
Choice , Choice
Standard
Canned Vege—
tables Fancy, Choice Fancy, Extra
Extra Extra Standard
Standard Standard
Fresh Fruits 8:
Vegetables . . No. 1 No. 1 Personal High
Selection Quality
Eggs ....... A 8: B A Large Fancy, ---------
Large, Heavy Wt.,
A 8: B Mixed
Medium Colors
Butter ...... 90 8: 92 92 score 92 score College
score Dairy
Poultry ..... B A A A 8: B

 

 

STATE OF MICHIGAN
DEPARTMENT OF ADMINISTRATION
PURCHASING DIVISION

 

BIDDING POLICY
Figure 14.

Established procedures governing State Purchasing provide for the following:

SEALED BIDS

Sealed bids are required for all purchases estimated to exceed $2000. 00. Such bids state
they are to be received on or before a specified date and hour at which time they are
Opened, read and tabulated at a public hearing. With all ”requests for quotation" covering
sealed bids, return envelOpes are enclosed giving the bid number, time of Opening, name
Of bidder and name of buyer. All bids should be returned in this envelOpe. Should it be
necessary to use a larger envelOpe to include literature, samples, etc. , all Of the above
information must be shown on the face of your envelOpe. Sealed bids which are sent by
mail must reach the Purchasing Division so that they may be ”time stamped” prior to the
formal Opening. Bids delivered in person must be taken to the Purchasing Division and
“time stamped" previous to the specified Opening time. Bids not stamped or stamped
after the Specified Opening time cannot be accepted.

 

 

 

 

 

OPEN BIDS

Bids for purchase estimated to total less than $2000. 00 are to be returned on or before the
date specified on bid. A public Opening is not held and bids are not made public until after
award has been designated. Bids received in our mail room up to 5:00 P. M. , of the

closing date indicated on the bid, shall be considered as meeting the requirements. Late

bids will be so marked and kept on file but cannot be given consideration for an award.

Regular procedures may be waived only in cases Of real emergencies. (1

 

TELEGRAPH BIDS

Bids by telegraph will be accepted only in response to telegraphic invitations or when
replies by telegram are specifically requested on our ”Request for Quotation Form
DA~201". In the latter case, the confirming bid must also be returned immediately.

 

Both sealed and Open bids may be changed or amended by telegraph provided, both the
bid form and the telegram are received before the designated time Of Opening in the case
Of sealed bids, and the Specified closing time in the case of Open bids.

 

PRICES

Prices quoted are considered firm unless otherwise stated. Firm quotations may, at the
discretion Of the Purchasing Director, be given preference. If escalator clauses are
used, they must also provide for price adjustments reflecting market changes downward.

We cannot permit price adjustments involving errors due to carelessness. Vendors are,
therefore, requested to check carefully their quotations for accuracy.

NOTE
DO not include Open bids in sealed bid envelOpes. Do not enclose two or more sealed bids
in the same envelOpe unless they are to be Opened at the same time.

 

Do not invalidate your bid. Follow these instructions and those contained on the face and
reverse side of the bid form.

WE CANNOT MAKE EXCEPTIONS TO THESE PROVISIONS.

 

VI? 19 ’51:;
Ian '2’? ’1‘]
Fab 12 '57

1:1 {if 4 ’57

 

 

MICHIGAN STATE UNIVERSITY LI BR

I II II I oIIIIIII III IIIIIIIIES