Question

Garden Variety Flower Shop uses 550 clay pots a month. The pots are purchased at $3.00 each. Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs are $20 per order. The manager has been using an order size of 1,500 flower pots. a.What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearest whole number. Round all other intermediate calculations and your final answer to 2 decimal places. Omit the "$" sign in your response.) Additional annual cost b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,500)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent. Omit the "%" sign in your response.) % of the storage space would be needed. About

Answer 1

Saluhion given 9ondities are D 550 pots peu month 4600 pots /year 550 X 12 Cost oduing S= $20 30.90 Unit/year H = 3X 0.30 - & =1500 Tc tou 8 i's finding Noo given by Enous that as we TC xH +DxS TC = 1500 X0.9 +6600 X 2o 150D TC = 763 675 + 98 TC = 763 Novs Finding So ix 6600 X20 541.60 2.5 2DS O.90 542 appuox Te to S0 Nouo TC BoXH +DXS B0 42 X o.9 +6600 X 20 542 243.9+243.5 TC 2 487.4 763-487 .4 = 275.6

275.6 addional Eest an nual lost is the shop incwuing by Slaying oith his ouder 8i3e Benefit:- (b) 0:361 X100= 36/ 80 542 1500 Ans About 36/. ef the Stouage spacu wauld be needed.