Operations Management

Many companies have inventory in which they must manage in order to supply the demand of the consumer or customer. Our project is based on the research of Inventory management and how it is applied or used in the Cracker Barrel Restaurant. In this project, we have elected to explain and determine how the company develops its inventory plans to support the products or services they provide to the consumer. On our field research we asked a series of questions to one of Cracker Barrels’ Associate Managers Tom Kelly trying to get a general idea of how or what methods they use to manage the company’s inventory.

There are many functions that can accommodate the functions of inventory, Cracker Barrel Restaurant maintains four types of inventories: they have the raw material inventory, work-in-process inventory, maintenance/repair/ operating supply inventory, and finished good inventory. The raw materials is the uncooked food in which they order, the work in process inventory is when they are preparing the food, the maintenance/repair/ operating supply inventory is the chemicals they use to clean the dishes and the grill, and the finished good inventory is the food that is cooked and served. Being that all of these things are inventory they must be managed, used, and monitored in order to keep inventory straight and to minimize cost. Cracker Barrel has many methods of managing the inventory in which they reorder if it is raw materials or other materials. The methods that are used to manage raw materials are the method of rotating the raw materials in a certain order like from oldest to newest that will allow them to use the oldest inventory first and the newest last. They also use a method which they portion the inventory to only serve a certain amount for example, they portion out the amount of fries that they serve in one serving the fries have to weight a certain amount in order to be serve with the meal. The method used to manage work-in-process is they have to cook a certain amount of food a day, but they can not over cook that amount in which they management team puts on their cook sheet. The cook sheet is a sheet that tells the cooks the number of pans of corn to cook for that shift they are working or number peas to cook for that night. Sometimes the cook sheet has the right amount on there to cook but sometimes they have to end up cooking more than what is on the sheet and sometimes they end up cooking to much even when they cook what is on the sheet. The methods used on finished goods are simple, the cook must use something the restaurant calls deep auto. This means that the cook must use the proper utensils in order to dip up the right amount of food onto a plate. The inventory methods used to manage the company’s different materials have so far been the methods that work for the Cracker Barrel restaurants.

Inventory is managed by establishing a system that works for keeping inventory to a level in which inventory does not run out. Cracker Barrel uses a system that they call “The Par Level” system. They have a set par level of five this means that if the inventory is lower than the set level of five they reorder that product. Cracker Barrel has a physical count of inventory once a week, and once a week they have a truck that delivers their inventory. Inventory is counted each week and the way they reorder inventory for example, when the inventory is at level three of the par level system they will reorder a certain amount of that inventory in order to reach that par five level again. While reordering inventory, they must remember that they need an inventory level that last for at least a week and a half. Now that we have discussed how the restaurant decides how much to order, and when to order we can explain how the gift shop of the restaurant orders their inventory. They use the simple inventory models assume that receipt of an order is instantaneous. In other words, when the retail shop sells an item they will place an order when the inventory is sold for that particular item and when the item is sold the order will be received and the item will be order immediately. The time between placement and receipt time is called spot auto for the restaurants but we call it lead time, or delivery time. The gift shop also uses the Quantity