3. Assuming that the monthly demand is variable, determine the inventory order quantity and minimum total inventory cost for Pharr's distributor in Year 4. State all assumptions made in your inventory model calculations. 34 CHAPTER 11 Inventory Management 173 160 209 aby 2 Case Problem 13.3 Pharr Foods Company Phant Foods Company produces a variety of food products, including a line of candies. One of its most popular candy i Tur Stars beg of a dozen individually wrappershaped candies made martly from a blend of dark and milk chocolate macadamia na and blend of heavy cream fillings. The em is relatively expensive, Par Foods only produce it for its eastern market encompassing urbane such as New York. Atlanta, Philadelphia, and Boston. The Item is not sold in grocery or discount stores tut mainly in specially shops and specialty groceries, cany, and department stor Pharr Foods supplies the candy to single food distributor, which has several warehouses on the cast. The candy shipped in cases with us of the candy perc. Far Stansell well despite the fact that they are expensive at 395 per bag (wholesalel. Phares high-quality fresh ingredients and does not store tarpe stocks of the candy in inventory for very long periods of time Pharr's distributor believes that demand for the candy follows onal pattern. It has collected demand data te care sold) for Far Scars from its warehouses and the stores it supplies for the past three you, as follows September 263 October 142 370 410 November 200 270 December 277 The distributor mast hold the candy Inventory in climate controlled warehouses and be careful in handling it. The annual car ping costs 5116 per case. The tem must be shipped long distance from the manufacturer to the distributor in order to keep the candy fresh as possine, trucks must be al conditioned and shipments must be direct, and are often low than a truckload. As a result, ordering costs $4900 Phare Foods makes Par Stars from three primary ingredients it onders from different suppliers dark and milk chocolate, macida la nuts, and a special heavy cream ning Except for its unique war shape, a Far Star is almost like a chocolate trufe Fach Far Star weighs 1 ounces and requires 0.70 ounce of blended chocolate oso ounce of macadamia nuts, and 0.40 ounce of filling to produce induding spillage and waste) Pharr Foods orders chocolate, nuts, and filling from its suppliers by the pound. The annual ordering cost Is 55700 for chocolate, and the carrying cost is $0.45 per pound. The ordering cost for macadamia nuts is 6.00, and the annual carrying cost is $0.63 per pound. The ordering cost for filling is $4500, and the annual average carrying cost is 0.55 per pound Each of the suppliers offers the candy manufacturer a quantity discount price schedule for the ingredients as follows: Year Demand (case) Year 2 212 Month January February Year 3 192 225 210 331 216 March 253 April May 293 246 Filling Quantity (lb) Price Price Chocolate Quantity (lb) 0.50.000 50.001-100.00 100,001-150,000 150,001+ $3.05 2.90 Macadamia Nuts Quantity (lb) 0-30,000 30,001-70,000 70,001 Price $6.30 635 $1.50 1.35 1.25 0-40.000 40,001-N0.000 0.001+ 2.00 Determine the inventory order quantity for Pharr's distributor.Com pare the optimal order quantity with a seasonally adjusted forecast for demand. Does the order quantity seem adequate to meet the seasonal demand pattern for Par Stars? That it 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 pol icies of the food distributor and Pharr Foods on quality management and supply chain management 3. Assuming that the monthly demand is variable, determine the inventory order quantity and minimum total inventory cost for Pharr's distributor in Year 4. State all assumptions made in your inventory model calculations. 34 CHAPTER 11 Inventory Management 173 160 209 aby 2 Case Problem 13.3 Pharr Foods Company Phant Foods Company produces a variety of food products, including a line of candies. One of its most popular candy i Tur Stars beg of a dozen individually wrappershaped candies made martly from a blend of dark and milk chocolate macadamia na and blend of heavy cream fillings. The em is relatively expensive, Par Foods only produce it for its eastern market encompassing urbane such as New York. Atlanta, Philadelphia, and Boston. The Item is not sold in grocery or discount stores tut mainly in specially shops and specialty groceries, cany, and department stor Pharr Foods supplies the candy to single food distributor, which has several warehouses on the cast. The candy shipped in cases with us of the candy perc. Far Stansell well despite the fact that they are expensive at 395 per bag (wholesalel. Phares high-quality fresh ingredients and does not store tarpe stocks of the candy in inventory for very long periods of time Pharr's distributor believes that demand for the candy follows onal pattern. It has collected demand data te care sold) for Far Scars from its warehouses and the stores it supplies for the past three you, as follows September 263 October 142 370 410 November 200 270 December 277 The distributor mast hold the candy Inventory in climate controlled warehouses and be careful in handling it. The annual car ping costs 5116 per case. The tem must be shipped long distance from the manufacturer to the distributor in order to keep the candy fresh as possine, trucks must be al conditioned and shipments must be direct, and are often low than a truckload. As a result, ordering costs $4900 Phare Foods makes Par Stars from three primary ingredients it onders from different suppliers dark and milk chocolate, macida la nuts, and a special heavy cream ning Except for its unique war shape, a Far Star is almost like a chocolate trufe Fach Far Star weighs 1 ounces and requires 0.70 ounce of blended chocolate oso ounce of macadamia nuts, and 0.40 ounce of filling to produce induding spillage and waste) Pharr Foods orders chocolate, nuts, and filling from its suppliers by the pound. The annual ordering cost Is 55700 for chocolate, and the carrying cost is $0.45 per pound. The ordering cost for macadamia nuts is 6.00, and the annual carrying cost is $0.63 per pound. The ordering cost for filling is $4500, and the annual average carrying cost is 0.55 per pound Each of the suppliers offers the candy manufacturer a quantity discount price schedule for the ingredients as follows: Year Demand (case) Year 2 212 Month January February Year 3 192 225 210 331 216 March 253 April May 293 246 Filling Quantity (lb) Price Price Chocolate Quantity (lb) 0.50.000 50.001-100.00 100,001-150,000 150,001+ $3.05 2.90 Macadamia Nuts Quantity (lb) 0-30,000 30,001-70,000 70,001 Price $6.30 635 $1.50 1.35 1.25 0-40.000 40,001-N0.000 0.001+ 2.00 Determine the inventory order quantity for Pharr's distributor.Com pare the optimal order quantity with a seasonally adjusted forecast for demand. Does the order quantity seem adequate to meet the seasonal demand pattern for Par Stars? That it 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 pol icies of the food distributor and Pharr Foods on quality management and supply chain management