Read the following Case Study and answer these three questions:

1.) How should inventory policies for sea scallops be established if they are to be kept fresh before preparation? Kept frozen before preparation?

2.) Assuming his inventory policy is consistent with his service policy, has Tom done a thorough and precise job?

3.) Briefly describe the selection and use of demand distributions for this menu item

Case Study: Managing Mollusks Tando's Restaurant of Virginia Beach offers one of the most varied and unusual menus in the resort city. The restaurant has acquired a fine reputation for exquisite and unique dishes and is best known for its entrees that are ethnic adaptations of sea scalops. Due to the unusual preparation of these dishes, this seafood has become the largest-selling menu item Tando's does not purchase scallops locally, but receives shipments from a purveyor who serves its sister operation Tando's of Branford Connecticut. This practice is followed for quality and price reasons. Tando's management feels the transportation charges are minimal compared to the value derived from other factors. The New England purveyor has an established route to other local operations and is able to fill orders within three days. Tom Gengler, one of the proprietors, has been ordering scallops by intuition. His results are dissatisfying: Tando's experience spollage and shortages too frequently. Tom is certain that now is a good time to reconsider his service policy and test inventory as well Tom has spent the greater part of the week determining the cost data for the scatops and has itemized results as follows Annual demand-2500 dozen Ordering cost Purchase cost Stockout cost $25 per order $7/dozen $3.50 dozen Holding cost 50% of value Knowing the unpredictability of customers. Tom ortinges et estimating daily demand. Even though scallops are a perennial favorite, demand can be erratic. Based on scanty documentation, he has constructed a table of for the Demand (0) Frequency 35 35 8 15 10 10 5 Tom assumes his distribution does not differ significantly from the Poisson distribution. Considering the Poisson an adequate surrogate and stockouts as lost sales, he has found a reorder point of 16 dozen with an apparent safety stock of 3 dozen