A service garage uses 120 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3 and holding cost is $0.80 per unit on an annual basis. It works 300 days a year. Lead time is 10 days and standard deviation the demand during lead time is 4 boxes. The manager wants to achieve 90% service level.
a) What is the economic order quantity for cleaning cloths?
b) When should the cleaning cloths be reordered?