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?

Question

Business

Hailey Middleton

12 November, 23:25

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?

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Nolan · Answer 1

The additional annual cost that the shop is incurring is the ordering cost. The flower shop needs to find another supplier that provides free services on ordering bulks of materials needed for gardening. This way the owner is free of extra cost from his business venture.