Assignment:
Problem:
Garden Variety Flower Shop uses 870 clay pots a month. The pots are purchased at $3.60 each. Annual carrying costs per pot are estimated to be 40 percent of cost, and ordering costs are $25 per order. The manager has been using an order size of 1,250 flower pots.
a. What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearest whole number. Round all other intermediate calculations and your final answer to 2 decimal places.)
b. Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,250)? (Use the rounded order quantity from, Part a. Round your final answer to the nearest whole percent.)