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Hickory Hill is a well-established smoked foods company specializing in smoked turkeys and has been selling its products throughout the northwestern part of the continental United States since 1967. Recently, the firm signed a contract to sell their products in shopping malls during the fall holiday seasons, further increasing demand during that time. Initially owned and operated by a German immigrant family, the key to the company's success is a secret smoking process native to Rhineland, Germany. By 2016, the firm owned 75 retail outlets. In addition, there are aimost 100 dealer arrangements and nearly 100 holiday mall stores. Though the company sells a variety of turkey products, its competitive strength rests in two main lines of smoked turkeys: Tender Most (2016 sales: \$12,770,000) and Golden Best (2016 sales: $21,910,000). The 2017 sales estimates indicate a 15 percent and a 25 percent growth over the 2016 level for the two brands, respectively. The turkeys are supplied by Kentucky Meadow Turkeys, Inc. The supplier cleans and smokes the turkeys using the patented process, and provides the necessary industrial packaging for safe shipment to the retail outlets. Hickory Hill coordinates the remaining retailing functions. The cured and packaged turkeys are purchased from the supplier on an FOB origin basis and sold to the retail outlets on an FOB destination basis. Hickory Hill buys the packaged turkeys from Kentucky Meadow Turkeys at a price that is approximately 35% of the price that is charged to the retail stores. Products The smoking process employed by Hickory Hill has some unique characteristics which clearly differentiate the company's products from those of its competitors. The Hickory Hill smoked turkeys can be refrigerated for up to 21 days without spoiling. Moreover, they remain fresh and edible for another seven days even without refrigeration. These features do not permit the company to engage in significant forward buying since the product still has a relatively short life. Consequently, the company purchases the turkeys from the Kentucky supplier in simple economic order quantities. One of the concerns for Hickory Hill is that customers tend to not buy turkeys that have less than 6 days of shelf life left. Tender Most and Golden Best are sold to retail outlets for $4.20 and $3.70 per pound, respectively. Golden Best sales in 2018, after four successive years of growth, are expected to remain at the 2017 level. However, due to some planned promotions and better positioning in advertising, a 30 percent sales increase is expected for the Tender Most line. Hickory Hill has recently changed over from the more traditional railroad refrigerator cars to intermodal refer containers operated by a freight consolidator, meaning there is no capacity constraint by minimum or maximum shipment size. It takes an estimated 108 hours (4.5 days) for the railroad to bring smoked turkeys from the supplier's factory to Butte, Montana (Hickory Hill's centralized distribution point) and another two days on average for the commercial trucks to deliver them to the various retail outlets. Tender Most is shipped in the case pack size of 25 pounds, while Golden Best is shipped in 30-pound packs. The yearly inventory carrying costs and the in-transit inventory costs (both expressed as a proportion of the cost of the turkeys) are 27.0 percent and 17.5 percent, respectively. The order processing costs are estimated at $30 per order thaniks to a new automutic electronic ordering. procedure. Hickory Hil pays $12.85 per hundred pounds shipped for the refriserated containers and another $15.45 per hundred pounds for the cemmercial trucks: (t) shipments to storei, on a daily basis). From a logstical standpoint, management wants to examine two issues for the planning year of 2018 . in 2017, the comparny has already found itself out of stock of Golden Best on several occasions while the tresh geods were in transit, Since Golden Aest is their largest seling brand, Hickory Hill wants te minimite its cost of lost sales by determining the best reorder point and the best order wite. It has been determined that stock out covts are approkimately $390 per case lin future lossest in addition to the obvious contributioa margin losses. The accounting department reviewed the last 50 working dars to find the diatribution of daily demand from retaliers for lanuary and february 2017 (see Exhibit 13 ) The current reorder policy is to place Inesh orden as the on-hand ifrentory gets down to 60,000 pounds of Golden Blest (2000 cases). Management wants to determine if this is the correct ondering pattern. and if not. (a) the ootimal feorder point and, once thid is fixed. (b) she optimal euantify of cases to reorder each time. With respect to the Tender Most beand, management wahes to evaluate alternative modes of transportation. Two alternatives are avallable (1) the company could stop the uae of freezer cortainess for delivery to Butte, Montana, and use company-owned private trucks, or (2) the company could bypass the railroad and use an air carrier service that would pick up the cases in Kentucky and deliver them directly to the retal cutiets. it has been decided that if any changeover is economical for the company and the thew iystein (if at all) works well for Tender Most in 2a18, in subvequent years, similar feas bility exercises could be carried out for Gelden Best. These reevaluation of trampertation modes was trizgered by an offer from a nee small aircratt. company providing cargo shipping at very attractive rates: $4.25 for the first 10 pounds per case for a guaranteed two-day delivery service anywhere in the contineetal United States, after 10 pounds, each extra pound per case is to be billed at the rate of 25 cents per pound per case The company-owned truck is expected to cost $3145 per trip (1700 miles 8.51.85/mile) and has a maximum capacity of 1420 cases of Tender Most. Each trip is eapected to take no more than 3.75 dayz. Oa the retarn trip, the trucks will haul loads of materiak for smoking and packaping the furkers in Kentucky, so no backhaul costs are involved with moving the turkeys. Since the shipments from the distribution center to the retail eutlets are relathely small, is has been recognised that even if the firm chooses the company-owned truck option, the delivery to retallers would still imolve the sie of commercial trucks: Questions: You have been hired by Hickory Hill as a logiatics consultant to carry out the necessary analyair. Hickory Hill management has specifically asked you to provide the following information in a formal written report. Additionally, vou have been asked for your recommendations and a short explanation why. You will provide the report in the format as requested by the management's representative. For Tender Most Brand 1. Calculate the projected annual demand volume in cases and dollars, average daily volume in cases and dollars, and the demand during lead time and EOQ in cases, for 2018. 2. What is the price per case for the Tender Most turkeys that Hickory Hill acquires