Garden Variety Flower Shop uses 750 clay pots a month. The pots are purchased at $2 each.
Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs are
$20 per order. The manager has been using an order size of 1,500 flower pots
.
a. What additional annual cost is the shop incurring by staying with this order size?
b. Other than cost savings, what benefit would using the optimal order quantity yield?
