Identify the causes of the seasonal demand pattern for Diamonds.Determine the inventory order quantity for each of the three (3) primary ingredients thatDiamant Foods orders from its suppliers. Diamant Foods Company produces various food products, including a line of candies. One of itsmost popular candy items is Divine Diamonds, a bag of a dozen individually wrapped diamond-shaped candies made primarily from a blend of dark and milk chocolates, macadamia nuts, anda blend of heavy cream fillings. The item is relatively expensive, so Diamant Foods produces itonly for its eastern market, encompassing urban areas such as New York, Atlanta, Philadelphia,and Boston. The item is not sold in grocery or discount stores but mainly in specialty shops andspecialty groceries, candy stores, and department stores.Diamant Foods supplies the candy to a single food distributor, with several warehouses on theEast Coast. The candy is shipped in cases of 60 bags per case. Diamonds sell well, despite beingexpensive, at $9.85 per bag (wholesale). Diamant uses high-quality, fresh ingredients and doesnot store large candy stocks in inventory for very long periods.Diamant's distributor believes that demand for the candy follows a seasonal pattem. It hascollected demand data (i.e., cases sold) for Diamonds from its warehouses and the stores itsupplies for the past three (3) years, as follows:Demand (cases)Year 2MonthYear 1Year 3228JanuaryFebruaryMarch192212210223231226205260216AprilMayJune252293228235246172220229JulyAugustSeptemberOctober160209217147231226256263302342370260411November251279December273277293The distributor must hold the candy inventory in climate-controlled warehouses and be carefulhandling it. The annual carrying cost is $116 per case. Diamonds must be shipped a long distancefrom the manufacturer to the distributor, and to keep the candy as fresh as possible, trucks mustbe air-conditioned, shipments must be direct, and shipments are often less than a truckload. Asa result, the ordering cost is $4,700.Diamant Foods makes Diamonds from three (3) primary ingredients it orders from differentsuppliers: dark and milk chocolate, macadamia nuts, and a special heavy cream filling. Except forits unique shape, a Diamond is almost like a chocolate truffle. Each Diamond weighs 1.2 ouncesand requires 0.70 ounce of blended chocolates, 0.50 ounce of macadamia nuts, and 0.40 ounce of filling to produce (including spillage and waste). Diamant Foods orders chocolate, nuts, andfilling from its suppliers by the pound. The annual ordering cost is $5,700 for chocolate, and theannual carrying cost is $0.45 per pound. The ordering cost for macadamia nuts is $6,300, andthe annual carrying cost is $0.63 per pound. The ordering cost for filling is $4,500, and the annualcarrying cost is $0.55 per pound.Each of the suppliers offers the candy manufacturer a quantity discount price schedule for theingredients, as follows:ChocolateMacadamia NutsPrice Quantity (Ib.)0-30,00030,0001-70,000FillingPrice Quantity (Ib.)Price Quantity (lb.)0-50,00050,001-100,000100,001-150,000150,001+3.056.501.500-40,00040,001-80,0002.906.251.352.755.9570,001+1.2580,001+2.60

The economic order quantity is the optimal order quantity that would minimize the overall holding…

Answered: Identify the causes of the seasonal…

Identify the causes of the seasonal demand pattern for Diamonds. Determine the inventory order quantity for each of the three (3) primary ingredients that Diamant Foods orders from its suppliers.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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