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Garden Variety 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

.

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

b. Other than cost savings, what benefit would using the optimal order quantity yield?