Q. I understand there is several pieces to this question, please advise: A flower shop uses 800 clay pots a month. The pots are purchased at $2 each. Yearly carrying costs are estimated at $0.60 per pot per year and ordering costs are $20 per order. The manager has been presently using an order size of 1600 flower pots per order.

Illustrate what additional cost is the shop incurring by using this present order size rather than the economic order quantity?

Other than potential cost savings, illustrate what benefit(s) would using the optimal order quantity yield?

Illustrate what is the number of orders per year if the manager uses the present order quantity of 1600?

Illustrate what is the number of orders per year if the manager uses the Economic Order Quantity?

Illustrate what is the maximum number of flower pots which are held in inventory in a given ordering cycle?

Explain how long will each order last (in months) if the manager uses the Economic Order Quantity?

Assume which the lead time for the pots is 1 month. Illustrate what is the Reorder Point? Verbally, interpret the meaning of this Reorder Point.