As mentioned in the opening part of the Robatelli's Pizzeria case, there are now 53 locations throughout the greater Pittsburgh area. Each one of those restaurant locations needs an ongoing supply of the many ingredients of pizzas and the other foods served. The raw materials each restaurant needs to make and sell pizzas and other menu items are things such as flour, salt, sugar, tomatoes, potatoes, lettuce, tomato paste, spices, meats, cheeses, and buns, as well as supplies such as napkins, take-out packages and doggy-bag containers.

Each restaurant must maintain an inventory of all of these items in order to properly serve customers. However, it is a difficult balance to maintain the right amount of each of these items. As you know from your experience in eating at restaurants, it can leave a negative impression in your mind if the restaurant has run out of the food you intended to order. Thus, there must always be enough ingredients and supplies to meet customers' desires.

Two factors make it difficult to maintain enough inventory of food and supplies: predicting demand, and time or space limitations. First, it can be difficult to predict customer demand for any particular day or week. The less predictable the stream of customers eating at the restaurant, the harder it can be to know how much inventory of food and supplies to keep. Second, time and space limit the amount of inventory a restaurant can keep. Food inventory is perishable, and much of it has a very short shelf life. For example, lettuce and tomatoes may remain fresh for only a couple of days. Other food items, such as flour and salt, may remain usable for months. But even for items with a long shelf life, it is hard to keep a large inventory at a restaurant because of limited storage space. Most of the space in a restaurant is for customer dining and the kitchen.

Robatelli's uses a central commissary to prepare some of the ingredients before they are shipped to the restaurant. For example, the individual restaurant locations do not make dough on the premises. The flour, salt, yeast, and other ingredients are maintained, mixed, and prepared at the commissary, and this premade dough is then shipped by truck to restaurants daily. The pizza sauce and many ingredients for sandwiches and salads are also premade at the commissary.

All of these factors taken together mean that Robatelli's must continually be purchasing the ingredients for pizzas and other foods, and supplies. These inventory items must be delivered to the commissary and then to each of the 49 Robatelli's locations to ensure that they never run out of the items needed to serve customers. Since there is a short shelf life for much of the inventory, the purchasing takes place on a daily basis to keep the commissary and each restaurant location properly stocked.

Required:

a. Describe how you believe an efficient and effective purchasing system should be organized at Robatelli's. Consider details such as the following:

(a) How many purchasing agents should be employed?

(b) Where will these purchasing agents be located?

(c) How will the necessary information for purchasing flow between restaurants and these purchasing agents?

(d) How will IT systems be used in purchasing?

(e) How and when will purchased items be delivered to the restaurants? (Remember that all 49 locations are within the Pittsburgh area, and none would be more than a one-hour drive from the corporate Headquarters.)

(f) Describe any IT controls that would be necessary or desirable in your purchasing system.