Northwood

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Submitted By akadakia
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Diamant Foods Company – Case Study
MGT - 9710 Diamant Foods Company – Case Study
MGT - 9710

Ankit Kadakia
Victor Hang Fung
Monnica Honrade
Bojan Grozdanic
Ankit Kadakia
Victor Hang Fung
Monnica Honrade
Bojan Grozdanic

Background
Diamant Foods, a company focused on producing food products, specializes in producing an exquisite line of candies. One of its most popular candy items is Divine Diamonds, a bag of dozen individually wrapped diamond-shaped candies made primarily from a blend of dark and milk chocolates, macadamia nuts, and a blend of heavy cream fillings. The company only sells Divine Diamonds in specialty stores in urban areas in the Notheast America. The candy is shipped in cases of 60 bags of the candy per case. Diamonds sell well, despite the fact that they are expensive, at $9.85 per bag (wholesale). Since the company uses only high quality and fresh ingredients, the company does not store large inventory of the candies for a very long time.
The 3 year data provided in this case follows a seasonal pattern, using regression we determine the demand for the fourth year which is as follows Distributor Order Quantity | | Month | Forecasted Demand | Jan | 235 | Feb | 249 | Mar | 244 | Apr | 305 | May | 270 | Jun | 238 | Jul | 226 | Aug | 234 | Sep | 320 | Oct | 440 | Nov | 311 | Dec | 334 | Year | 3404 |

Based on the above the annual demand is 3404/year. The annual carrying cost is $116 per case and Diamonds must be shipped a long distance from the manufacturer to the distributor, and in order to keep the candy as fresh as possible, trucks must be air-conditioned, shipments must be direct, and shipments are often less than a truckload. As a result, the ordering cost is $4,700.
The Inventory Order quantity is thus given by

= 525.18 cases/yr.
The cause of the seasonal…...

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