Managing stock to meet customer needs
A McDonald's Restaurants case study

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Page 2: Types of stock

different stock typesStock is the physical product a company buys, creates or sells. Every business has three main types of stock:

Raw materials

The raw materials are the ingredients that will go into producing the finished product. For McDonald's, these will include the buns, beef patties, paper cups, salad ingredients and packaging. These are delivered to the restaurants between 3 and 5 times a week. The raw materials arrive together on one lorry with three sections so that each product can be stored at a suitable temperature.

The three sections are:

  • frozen
  • chilled
  • ambientwhich means foods that can be stored at room temperature. This applies to items such as coffee or sugar sachets.

Work-in-progress (WIP)

Work-in-progress refers to stocks that are in the process of being made into finished product. A Big Mac consists of a bun, two beef patties, lettuce, cheese, pickles, onions, sauce and a small amount of seasoning. The restaurant will only combine these items just before the customer orders them so the Big Macs are hot and fresh when served.

Finished products

Finished products are goods that are ready for immediate sale to a customer. At any one time, a restaurant will have a range of products ready for sale. Many of these will include finished products like Filet-o-Fish, Big Macs and side salads.

Using stock

At McDonald's, all raw materials, work-in-progress and finished products are handled on a First In, First Out (FIFO) basis. This means raw materials are used in the order they are received. Therefore stock is always fresh because products are sold in the order they are made. If the process First In, Last Out (FILO) was used, then the finished product would be dry and unappealing because the first one prepared is the last one sold.

McDonald's Restaurants | Managing stock to meet customer needs
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