Question

Explain the main differences between optimal prices and AP price. Next, compare and contrast the bill-paying procedures that can be employed by hospitality operators. You will also need to discuss which bill-paying procedure you believe is most important. Justify your response.

Describe how the supplier selection criteria can help a small independent hotel find products that help control costs and offer different selections. Provide specific examples to support your response.

Answer 1

The optimal price is the price at which a seller can make the most profit. in other words, the price point at which the seller's total profit is maximized. We can refer to optimal price as the profit as the profit maximizing price. The optimal price refers to both products and services. there are various ways to determine this price. If a product's price is too low, the manufacture is moving lots of it. However, the company is not earning the maximum possible profit from that product. However, when a products price is too high, the manufacture moves too few units. Even though it earns a high margin per unit, its profit is not the highest possible.Most companies find their optimal price through trails and errors. When they find the price point that gives them the ideal sales volume, they have reached the optimal price.

As Purchased (AP) is the portion of food that is in the raw state before any cutting, processing, or cooking has occurred.  

AP Price = EP price * percent yield

Edible portion (EP) is the portion of food that will be served to a customer after the food has been cut and cooked.

Percent yield is the factor used to determine how much of food is lost as a result of cooking, cutting, and processing of the food.

The bill paying procedures include credit cards, direct billing ( bill-to -account), cash or personal check, traveler's checks, or debit cards.

Credit cards, today's business and pleasure travelers usually pay with a credit card. "Plastic money" has advantages for the card holder as well for the hospitality operator. The card holder is assured instant credit to satisfy debts incurred. The procedure might include following steps:

1. Note the credit card expiration date.

2. Enter the approval of the amount of the charge on the PMS checkout screen.

3. Verify the credit limit available by using the credit card validator.

4. Allow the guest to review folio and sign.

5. Check the guest signature on the folio against the signature on card

6. Give the card and guest copy of the folio to the guest.

Bill to Account (Direct Billing), both corporate representatives and private guests, may use the direct billing, a pre - authorized account that allows guest to have their charges processed on a regular billing cycle without the use of credit card to settle the account. The following procedure is used to process a bill to account payment:

1. Request corporate or personal identification.

2. Check to be sure that the individual is authorized by the account holder to the bill of account.

3. Note any credit limit per employee.

4. Note any red flags on the credit file due to nonpayment of bills.

5. Note authorized signature.

6. Enter charges into point of sale terminal along with bill to account identification.

Cash and Personal Checks, most hotels require cash in advance from guests who choose this payment, since the guest has established any credit rating with the hotel. To process a cash payment, the following procedure can be used:

1. Check the daily currency conversion rate when converting foreign into national currency. Take time to ensure that math is accurate

2. Retain the amount tendered outside the cash drawer until the transaction is completed.

3. Maintain an orderly cash drawer, with bills separated by denomination.

4. Develop an orderly procedure to make change from the amount tendered.

5. Count the change out loud when giving it to the guest.

6. Perform only one procedure at a time. Refuse to make change from another bill of a different denomination if a previous transaction has not been completed.

7. Issue a receipt for the transaction.

Traveler's Checks are prepaid checks that have been issued by a bank or financial organisation; they have been an accepted form of legal tender for many years.These checks are a welcome method of payment in the lodging industry. Traveler's checks are processed like cash. Proof of credit has already bee established, and there is no payment of percentage of the sale to a credit agency by the hotel, as the guest has paid a percentage of the face amount of the traveler's check to issunig agency.

Debit Cards or checks are embossed plastic cards with magnetic strips on the reverse side that authorize direct transfer of funds from a customer's bank account to the commercial organisation's bank account for purchase of goods and services. To process a debit card payment, the following procedure is used;

1. Insert debit card into validation machine

2. Have guest enter personal identification number.

3. Process debit card voucher as a cash payment on the guest folio.

I believe that Debit card bill paying procedure is the most important, because its procedures are simple.

Supplier selection is an important criteria for any business, because it directly affects the cost of the product. If a business is able to reduce the number of intermediates as possible as they can, they will be able to reduce the cost of their product. For example if a hotel is purchasing some products from his supplier through a number of intermediates in between, the cost of the final product of the hotel will definitely go up.