Need help creating a pattern for a stroller blanket

I saw a sewn stroller blanket on Etsy that has a unique shape to it. I thought I would try to create a knitted one. I am a beginning knitter so I need some help.

Here is the link to it.[]=tags&includes[]=title
Cut and paste this into your browser to see pictures of it.

I know how to increase and decrease so I think I could figure out how to make the overall shape but how would I make a ribbed edge all around it? Or does anyone have a better idea for an edge technique? I plan to line it with flannel as well.

You can pick up sts all around the edge for the ribbing, or maybe knit it as you go.