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Diamant Foods Company

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Case Study: Diamant Foods Company

Diamant Foods Company produces a variety of food products, including a 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 item is relatively expensive, so Diamant Foods produces it only 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. Diamant Foods supplies the candy to a single food distributor, which has several warehouses on the East Coast. 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). Diamant uses high-quality, fresh ingredients and does not store large stocks of the candy in inventory for very long period of time. Diamant’s distributor believes that demand for the candy follows a seasonal pattern. It has collected demand data (i.e., cases sold) for Diamonds from its warehouses and the stores it supplies for the past 3 years, as follows:

Demand (cases)
|Month |Year 1 |Year 2 |Year 3 |
|January |192 |212 |228 |
|February |210 |223 |231 |
|March |205 |216 |226 |
|April |260 |252 |293 |
|May |228 |235 |246 |
|June |172 |220

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