What extra annual cost is shop incurring-staying order size


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.

What additional annual cost is the shop incurring by staying with this order size?

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Operation Management: What extra annual cost is shop incurring-staying order size
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