Problem 12-5 (Algo) Garden Varlety Flower Shop uses 810 clay pots a month. The pots are purchased at $3.30 each. Annual carrying costs per pot are estimated to be 20 percent of cost, and ordering costs are $15 per order. The manager has been using an order size of 1,750 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.) Additional annual cost b. Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,750)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent.) About % of the storage space would be needed.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question
Problem 12-5 (Algo)
Garden Varlety Flower Shop uses 810 clay pots a month. The pots are purchased at $3.30 each. Annual carrying costs per pot are
estimated to be 20 percent of cost, and ordering costs are $15 per order. The manager has been using an order size of 1,750 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.)
Additional annual cost
b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,750)? (Use the
rounded order quantity from Part a. Round your final answer to the nearest whole percent.)
About
% of the storage space would be needed.
Transcribed Image Text:Problem 12-5 (Algo) Garden Varlety Flower Shop uses 810 clay pots a month. The pots are purchased at $3.30 each. Annual carrying costs per pot are estimated to be 20 percent of cost, and ordering costs are $15 per order. The manager has been using an order size of 1,750 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.) Additional annual cost b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,750)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent.) About % of the storage space would be needed.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.