Operations - Inventory Management Question
A flower shop uses 800 clay pots per month. The pots are purchased at $2 each. Annual carrying costs are estimated at $.60 per pot per year and ordering costs are $20 per order. The manager has currently been using an order size of 1600 flower pots per order. Considering this, please answer the following questions :
- What is the number of orders per year if the manager uses the current order quantity of 1600?
- What is the number of orders per year if the manager uses the Economic Order Quantity?
- What is the maximum number of flower pots that are held in inventory in a given ordering cycle?
A flower shop uses 800 clay pots per month. The pots are purchased at $2 each. Annual carrying costs are estimated at $.60 per pot per year and ordering costs are $20 per order. The manager has currently been using an order size of 1600 flower pots per order. Considering this, please answer the following questions :
- What is the number of orders per year if the manager uses the current order quantity of 1600?
- What is the number of orders per year if the manager uses the Economic Order Quantity?
- What is the maximum number of flower pots that are held in inventory in a given ordering cycle?
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