Buy by the case or by the unit?

The supplier sells boxes. You sell portions.

Every small kitchen runs on two units at once. The supplier quotes a case: 40 patties, 12 packs of cheese, a sack of rice. The menu sells one burger. Somewhere between the two, someone has to divide, and someone has to round.

The dividing is where the food cost comes from. The rounding is where the overordering comes from. Both get done in the owner's head, on a calculator, on the way to the supplier call, and neither gets written down. This guide is about the rounding. The dividing gets its own section near the end, because it has a trap of its own.

The half-a-case rule

Say you need 32 patties to get to the next delivery. The case holds 40. You order one case and hold 8 more than you needed. Next week you need 44. You order two cases and hold 36 more than you needed. The overshoot is never the same twice, but over enough orders it averages out to half a case. That is not a claim about your supplier. It is what rounding up does to any number: the amount you round away is spread evenly between zero and a full case, and the middle of that spread is half.

So the price of buying by the case is half a case of extra stock on every line, on every order. For a 40-count case that is 20 patties. For a 12-pack of cheese it is 6 packs. Whether that costs you anything depends on one question: does the extra sit, or does it spoil?

The shelf-life ceiling

A case only works if the whole case gets used before it goes off. Divide the units in the case by your daily sales of that item and you get the number of days the case lasts. If that number is longer than the item's shelf life, the tail of every case is a write-off before you have opened it.

The rule follows from the cadence guide, which says the gap between orders can never be longer than shelf life minus lead time. A case is a forced gap. Once you have bought it, you are not buying that item again until it is gone. So: units per case divided by daily sales must be no more than shelf life minus lead time. Above that ceiling, the case is too big for the kitchen, whatever it costs.

The table is a burger stall on an ordinary week. The point is not the numbers, which are yours to replace. The point is that the same kitchen gets a different answer on every row, and the fresh rows are where the case hurts.

When the discount pays, and when it does not

A case discount is a saving on every unit you sell and a full-price loss on every unit you bin. Put those together and the break-even is one line: the case wins when the discount per unit is bigger than the share of the case you expect to throw away.

Take the patties. Loose, the supplier charges ₱46 each. The case of 40 is ₱1,600, which is ₱40 each, a 13% discount. On a week where the kitchen uses 36 of the 40 and bins 4, the case cost ₱1,600 for 36 usable patties. That is ₱44.44 each. Still cheaper than ₱46, by ₱1.56 a patty. On a slow week where it uses 32 and bins 8, the same case is ₱50 a patty. Now the loose price was cheaper by ₱4, and the kitchen paid ₱128 more up front for the privilege.

The discount did not change. The spoilage did. And the spoilage is not a guess: it is the overshoot from the half-a-case rule, capped by shelf life. So the honest comparison is not case price against unit price. It is case price against unit price, after you have taken out the units that will not make it to the grill.

Round up or round down

The case forces a choice the unit never did. Need 32, case of 40: one case and carry 8, or no case and run short by 32. That is not a real choice, so the question only bites when you need more than a case. Need 44: one case and run 4 short, or two cases and carry 36 over.

The answer is the one from overordering versus running out: which mistake costs more for this item? Two rules cover most rows.

• Round down when the overshoot is bigger than your safety stock. The safety stock already covers the 4 you are short. The 36 you would carry have nowhere to go. For a perishable, that is the whole case's worth of spoilage exposure to save one busy afternoon.
• Round up on the item that carries the menu. A burger stall out of patties is closed. It is not a stockout, it is a shut door. Take the second case and accept the spoilage, because the alternative costs the whole day's takings, not one line's margin.

Frozen and dry goods skip the question. Round up. The overshoot waits for next week, and next week's order is smaller by exactly that much. The stock on the truck still counts, so do not forget that a case ordered yesterday is already part of the answer.

A case pack is not a minimum order

Owners use the two words for each other, and they round different things. A case pack is how one item is physically bundled. A minimum order quantity is a supplier rule about the smallest order they will send, in cases, in units or in pesos, and it applies to the whole order, not one line.

The difference matters because a minimum can be met with anything. Short of the ₱3,000 floor by ₱400? Add the frozen fries you were going to buy next Tuesday. Nothing spoils, the floor is met, and next Tuesday's order is smaller. A case pack cannot be met that way. It is one box of one thing, and if that thing is lettuce, the whole overshoot is lettuce.

So treat a minimum as a rounding problem for the order and a case pack as a rounding problem for the line. Fill the minimum with long-life rows. Fill the case only if the line clears the shelf-life ceiling on its own.

The dividing trap

Back to the food cost. A case of 40 at ₱1,600 is ₱40 a patty, and nobody gets that wrong. A case of 12 packs at ₱1,150 is ₱95.83 a pack, and most people write ₱96. A sack of 25 kilos at ₱1,340 is ₱53.60 a kilo, and the recipe uses 180 grams, which is ₱9.648, which becomes ₱9.65, or ₱10 on a busy day.

None of these look like mistakes. Each one is applied to every portion sold for as long as that number is on file, which is usually forever, because nobody revisits a cost they typed six months ago. On a high-volume line the drift is the difference between a menu item that makes money and one that only looks like it does.

Where ForeFlux picks up

When you add an item, ForeFlux asks how you buy it before it asks what it costs. Buy by unit keeps the one cost box. Buy by case swaps it for units per case and cost per case, stores the quote as you gave it, and prints the division under the row. The per-unit cost that feeds your food cost is derived, never typed, so it is the full-precision number and it moves when the case price moves.

The forecast and the suggested order stay in units. ForeFlux tells you the kitchen needs 32 patties by Thursday. Whether that is one case or 32 loose is your call, made with the shelf life and the price in front of you, and the rule holds: we suggest, you decide. It does not round to the case for you, on purpose. The rounding is where the judgement is, and the judgement is yours.

Cost and supplier minimums on the deliveries step are next on the list. When that ships, this guide gets a line about it. Until then, the number to keep in your head is the half-a-case rule.

Sources

• Harris, F. W., How Many Parts to Make at Once, Factory, The Magazine of Management 10(2), 1913, reprinted in Operations Research 38(6), 1990. The original lot-size trade-off between ordering cost and holding cost. Case buying is the same trade with spoilage added to the holding side.
• WRAP, Overview of Waste in the UK Hospitality and Food Service Sector (2013). 21% of food waste from spoilage, food bought and never cooked.