16.6. Spanish Interiors imports ceramic floor tiles from Mexico with various patterns in anticipation of contractor needs.

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16.6. Spanish Interiors imports ceramic floor tiles from Mexico with various patterns in anticipation of contractor needs. These tiles usually are ordered a year before delivery, and the production run for each tile pattern requires a separate setup. Therefore, the orders must be large to defray the setup cost. Because orders are made far in advance of customer needs, the company must guess what the con- tractors will like and order patterns in anticipation of these demands. Occasion- ally, tile patterns fall out of favor, and Spanish Interiors is stuck with slow-moving stock. The mark-up is 30 percent of the tile cost, and the inventory usually turns over about three times per year. There are two slow-moving tile?

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