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What additional annual cost is the shop

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1- 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?

 

 

Reference no: EM13654749

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