Cafés use different methods for keeping their inventories depending on what has worked for them in the past. There are pressures for inventories to be high and low which is why different companies use both methods. For a café there are many items that they carry which must be kept in inventory such as coffee beans, disposable cups, bags for ground coffee, white and brown sugar, cream and milk, pastries, and finally the ingredients for making the pastry if it is made fresh in the café. Inventory must be kept in order to satisfy the customers from day to day even between deliveries. High Inventories
A high inventory is an inventory that is large and full of every item that is carried. An example of an item that may be kept high in an inventory are the disposable cups used for coffees on the go, these can be kept for long periods of time and are essential for day to day business. There are positives and negatives for keeping a high inventory. Reasons for keeping a high inventory are to ensure that all customer needs are met at all times, if a regular item is not in stock it is call a stockout. The ability to purchase when an item price is low in order to keep the overhead costs down can save the café lots of money in many different ways. Costs such as ordering and transportation costs can be kept down by making one large order rather than multiple small orders. A big advantage for a high inventory is the buffer it creates for fluctuations in the costs of the goods used, this portion of the inventory is called the anticipation inventory. Some disadvantages to keeping a high inventory in a cafe the cost for the space needed to store the entire overstock items. The life-span on certain products may not be long enough to allow a high inventory and incorrect rotation can lead to a high waste of products.
Low Inventories
A low inventory is one that is lean in the sense that only the n
ecessary product is kept. In a café, products that do not have long shelf-lives cannot be kept for long periods. Just as high inventories, low inventories have positives and negatives as well. A low inventory in a café can lead to better rotation of the products which ensures a fresher product. The storage, handling, and inventory holding costs can be kept down by having a low inventory in a cafe. A reason against keeping a low inventory in a cafe is the creation of unsatisfied customers due to a lack of popular items like coffee. Cost fluctuations are another reason against keeping a low inventory because purchasing frequently means that the café must constantly adjust to the fluctuating costs.
Conclusion
In conclusion, there are positives and negatives to both methods of inventories. Cafés must keep a safety stock inventory which is some inventory that is kept in order to act as a buffer against variations and uncertainty in demand. For certain items it is beneficial to keep a high inventory. An example of such items are ones that have extended shelf lives, popular items and items that are forecasted to be in high demand. Other items must be kept in low stock to prevent waste. For a café, products such as the milk and cream cannot be kept in too much excess. Because cafes have both products that can expire and other items that have long shelf-lives, they must use a combination of concepts.
