Determine the inventory order quantity for Pharr’s distributor. Compare the optimal order quantity with a seasonally adjusted forecast for demand. Does the order quantity seem adequate to meet the seasonal demand pattern for Far Stars? That is, is it likely that shortages or excessive inventories will occur? Can you identify the causes of the seasonal demand pattern for Far Stars? Determine the inventory order quantity for each of the three primary ingredients that Pharr Foods orders from its suppliers. Discuss the possible impact of the order policies of the food distributor and Pharr Foods on quality management and supply chain management.

Pharr Foods Company produces a variety of food products including a line of candies. One of its most popular candy items is “Far Stars,” a bag of a dozen, individually wrapped, star-shaped candies made primarily from a blend of dark and milk chocolates, macadamia nuts, and a blend of heavy cream fillings. The item is relatively expensive, so Pharr Foods only produces it 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 and specialty groceries, candy stores, and department stores. Pharr Foods supplies the candy to a single food distributor which has several warehouses on the East Coast. The candy is shipped in cases with 60 bags of the candy per case. Far Stars sell well despite the fact that they are expensive at $9.85 per bag (wholesale). Pharr uses high quality, fresh ingredients and does not store large stocks of the candy in inventory for very long periods of time.