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Garden Variety Flower shop uses 1440 clay pots a month. The pots are purchased at $16 each. Annual carrying costs per pot are estimated to be 25 percent of cost, and ordering costs are $320 per order. The manager has been using an order size of 800 flower pots. There are 4 weeks in each month, 12 months a year. a. What is the Economic order quantity (EOQ)? What is the total cost associated with EOQ? b. What is the average number of clay pots on hand using EOQ? c. What is the total number of orders per year using EOQ? What is the time-between-orders (TBO) in weeks if using EOQ? d. What additional annual cost is the shop incurring by staying with the order size of 800? (as opposed to using EOQ) e. If order lead-time is three weeks, what is the reorder point? (ROP)

Operation Management, Management Studies

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